Country Report Bangladesh May 2009

Outlook for 2009-10

• The ruling Awami League (AL) is expected to serve a full term in office, having secured a huge parliamentary majority at the general election in December. The main opposition Bangladesh Nationalist Party won just 29 seats.
• The likely monopolisation of parliament by the AL for the next few years raises the risk of large street protests, a tactic that has been used in the past to express opposition to the government.
• The Economist Intelligence Unit now expects the budget deficit in fiscal year 2008/09 (July-June) to widen to 5.7% of GDP (compared with 5.4% previously), following the announcement of an extra fiscal stimulus package in April.
• Real GDP is expected to grow by 3.6% in 2009/10. Weaker inflows of workers' remittances will constrain private consumption growth, while the downturn in the global economy will temper demand for Bangladeshi exports.
• In the light of the latest data, we now expect consumer price inflation to average 4.9% in 2009, compared with 5.4% previously. Inflation will then accelerate to an average of 6.3% in 2010 as oil prices increase in that year.
• The merchandise trade deficit will be substantial in 2009-10 as the external environment becomes more challenging for exporters.

Monthly review

• A recent heatwave has put severe strain on the country's energy sector, resulting in an increase in load-shedding and a shortage of drinking water.
• Speculation still surrounds the cause of the mutiny by border guards in February. Publication of the findings of a government investigation into the matter has been delayed and is not due until the second week of May.
• The threat of legal challenges against the prime minister, Sheikh Hasina Wajed, faded in April after a public prosecutor proposed dismissing at least 11 cases, some of which had been filed by the previous government.
• The government unveiled a US$500m stimulus package in April to help mitigate the effects in Bangladesh of the global economic downturn. Nearly one-half of the extra money will be spent on agricultural projects.
• A newly formed pay commission has recommended a sharp increase in wages for government employees, but the government has warned that the latest recommendations are unlikely to be implemented in full.
• Inflows of workers' remittances increased by 9.5% year on year to US$885.7m in March. However, other data point to a dramatic drop in overseas demand for labour.

Source: Country Report

This report covers the following industry codes:
SIC Code: 48;70;15;49;60;10
NAICS Code: 517;72;23;22;52;212