Bangladesh economy managed to grow at an impressive rate of 7.11 percent in 2015-16 financial year (FY16) signifying strong macroeconomic fundamentals, the US-based Citibank said in its annual update on Bangladesh economy and market.
Both industrial and service sector registered higher growth in the FY16 compared to FY15 registering 11.09 and 6.25 percent growth respectively, the update, released today, said.
It noted that there were promising signs as private investment’s share in GDP increased to 23 percent in the immediate past fiscal from 22.1 percent in FY15 along with stable public investment.
“The government is working on creating 100 special economic zones in the country and has also classified a number of mega development projects into fast-track category to ensure rapid completion,” the update added.
It said easing business setup and investment regulations and rapid
execution of infrastructure projects will be the driving factors and will decide whether Bangladesh can increase foreign direct investment to $9.6 billion by 2020 from $2.2 billion at present and GDP growth rate to 8.0 percent in line with the 7th Five Year Plan.
The global bank, however, pointed out that while revenue mobilisation is the most important aspect to drive public investment the revenue-GDP ratio was only 9.90 percent last year.
It said the government has a target to increase the ratio to 16.10 percent by 2020. But broadening the taxpayer’s base and revenue sources as well as focusing on income from service providers and self-employed are the primary challenges in attaining the target.
Besides, the bank said that successful implementation of the new Value Added Tax (VAT) and Supplementary Duty (SD) Act-2012 will also determine the success of the revenue mobilization to a large extent.
It said the forex reserve continued to grow handsomely in 2016 reaching $32.09 billion from $27.49 billion at the end of 2015.
According to the update, the net foreign direct investment also recorded a 9.6 percent growth to reach $719 million during July-November period of 2016-17 fiscal year compared to previous fiscal.