Bangladesh economic growth slows to seven-year low

DHAKA (AFP) – Bangladesh said Wednesday that its economy grew at the slowest pace for seven years as the global downturn hit exports while drought and floods cut into agriculture and power troubles rocked industry.

The Bangladesh Bureau of Statistics (BBS) said growth in the year to June came in at 5.54 percent, the lowest since 2002-2003, when the economy expanded just 5.3 percent.

Bangladesh's financial year runs to the end of June, but the government published the growth figures ahead of the annual budget due on June 10.

Ziauddin Ahmed, a deputy director at the bureau, said the figure was helped by a better-than-expected 6.5 percent expansion of the services sector, which now makes up more than half of the country's gross domestic product (GDP).

But the government and central bank's forecast of six percent growth has proved optimistic, as industry only grew five percent, while agriculture expanded 2.77 percent.

"Bangladesh's industry is dependent on exports. But shipments were battered by the worst ever global economic recession," said Zaid Bakht, head of research the Bangladesh Institute of Development Studies, a government think-tank.

"The energy crisis also affected industrial growth," Bakht said. Bangladesh is in the grips of the worst utilities crisis in its history, with chronic power shortages taking a heavy toll on industry.

Overall exports were down one percent year on year in the nine months to the end of March, with apparel, which accounted for 80 percent of 15.56 billion dollar shipments last year, seeing a fall in orders.

Bakht said farming had also had a bad year with prolonged drought and flash floods hitting crucial rice crops, which are the mainstay of agriculture in the country.

This was somewhat offset as services continued to grow rapidly because of domestic demand fuelled by money sent home by the country's seven million migrant workers, he added.

Remittances were up nearly 20 percent to 8.27 billion dollars in the first nine months of the year and are projected to cross the 11 billion dollar threshold by June 2010.

The statistics office said GDP almost touched 100 billion dollars, nearly double the figure seven years ago, due to an average six percent growth annually during that period.