Country Report Bangladesh August 2008

Outlook for 2008-09

• The political scene will remain unsettled until early 2009. The next general election is expected to be held in late 2008 or early 2009.
• Despite the introduction of a range of electoral reforms, the election is expected to be fought between long-time rivals the Awami League and the Bangladesh Nationalist Party (BNP), the two largest political parties,.
• To ensure that the next election is free, fair and transparent, the Election Commission will need to hold formal discussions with each of the political parties.
• The Economist Intelligence Unit expects the budget deficit in fiscal year 2008/09 (July-June) to rise to the equivalent of 5.2% of GDP, compared with the official target of 5% in the 2008/09 budget.
• Real GDP is expected to grow by 6% in 2008/09, driven by strong household spending and investment.
• Consumer price inflation is expected to remain high over the forecast period, averaging 8.2% in 2008 and 8.8% in 2009.
• The trade deficit is expected to swell to record levels in 2008-09 as demand for industrial raw materials strengthens and international oil prices stay high.

Monthly review

• In July bail was granted to Arafat Rahman, the son of the former prime minister and leader of the BNP, Khaleda Zia. Mrs Zia and both her sons were arrested in 2007 on corruption charges.
• Motiur Rahman Nizami, the leader of an Islamist party, Jamaat-e-Islami, who was arrested in May on graft charges, was also released on bail in July.
• The caretaker government stressed throughout July its determination to hold local government elections in October, before the parliamentary poll that it hopes to hold in the third week of December.
• The government cut the fuel price subsidy at the start of July. Petrol prices increased by 34% to Tk87 (US$1.3) per litre on July 1st.
• The operating licences of some 2,000 rice mills have been revoked by the caretaker government, after the mills refused to co-operate with the administration's efforts to build up a strategic rice reserve for the nation.
• According to the Bangladesh Bureau of Statistics, the annual rate of consumer price inflation fell to 7.4% in May, from 7.7% in April.
• Workers' remittances totalled some US$7.9bn in 2007/08.

Source: Country Report