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Lower ADP, Sluggish Private Investment and Macroeconomic Challenges

MONTHLY Bangladesh Economic Update, June 2016

June 2016 New

The Unnayan Onneshan (UO), an independent multidisciplinary think tank, in its June issue of Bangladesh Economic Update 2016 reveals that the low implementation status of public investment coupled with continued sluggish private investment may cause the current state of jobless growth to intensify.

 

Expressing its concern over the poor implementation of ADP during July-May period of the FY 2015-16, the UO shows that only 62 percent of ADP has been implemented during this period whereas for FY 2014-15, FY 2013-14, FY 2012-13 and FY 2011-12, the implementation status was 67 percent, 66 percent, 67 percent, and 70 percent respectively.

 

The think tank points out that during July-May of FY 2015-16, 75 percent of total ADP allocation for roads and highways division has been implemented compared to 76 percent for the corresponding period of the previous fiscal year. However, only 46 percent of the total allocation of ADP for bridges division has been implemented during July-May of FY 2015-16 compared to 44 percent during July-May of FY 2014-15.     

 

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Business as Usual Budget in Exceptional Circumstances Rapid Assessment of National Budget 2016-17 June, 2016

MONTHLY Bangladesh Economic Update, June 2016

june 2016The Unnayan Onneshan (UO), an independent multidisciplinary think-tank states that the proposed budgetary measures for the year of 2016-17 fall flat in addressing the exceptional circumstances of investment stagnation, infrastructural deficit, rising unemployment and escalating inequality amidst institutional fragility 

“The budget speech seems to lack providing prudent and farsighted solutions to the current challenges except it earmarks an ambitious target of uplifting private investment of uplifting private investment amidst lack of business confidence,” says the organization in its rapid assessment of the proposed national budget for the FY 2016-17.
The Unnayan Onneshan points out that private investment has been remaining stagnant and has stood at 22.07 percent of GDP in FY 2014-15 and 21.78 percent in FY 2015-16, while increase in public investment from 6.82 percent in FY 2014-15 to 7.6 percent in FY 2015-16 has not succeed to create much needed crowding in of private investment.
Observing the declining trend in national savings, the research organisation finds that total national savings stood at 29.23 percent of GDP in FY 2013-14, 29.02 percent in FY 2014-15, and 30.08 percent in FY 2015-16, and warns that such trend may induce national output to decline.

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Major Economic Challenges: A Pre-Budget Analysis

MONTHLY BANGLADESH ECONOMIC UPDATE, APRIL, 2016

MEU-January-2016The Unnayan Onneshan (UO), an independent multidisciplinary think tank, in its pre-budget issue of Bangladesh Economic Update, April 2016, calls for far-sighted actions toward formulating 2016-17 budget against the backdrop of poor implementation status of 2015-16 budget.  
The current size of the economy demands larger national budgets, but the country’s incapacity to efficiently implement the current budgets does not suggest a prospect of substantial increase in the size of national budgets in the coming years, comments the UO.

In addition, taking account of the poor implementation status of allocations for physical and social infrastructure, and high youth unemployment rate, the think tank puts particular emphasis on the move toward expanding productive capacity in the economy through ensuring quality investment in physical and social infrastructure and thus creating job for the youth .

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INSTITUTIONAL FRAGILITY OF CENTRAL BANKING IN BANGLADESH

MONTHLY BANGLADESH ECONOMIC UPDATE, MARCH, 2016

MEU-March-2016The current issue of the Bangladesh Economic Update reveals the institutional fragilities of the country’s central bank against the backdrop of low effectiveness of monetary policies and poor risk management, driven by lax oversight and captured governance, resulting in scams, declining growth in disbursement of credit to private sector, rising non-performing loans, and excess liquidity.  Noting the linkage between expansion of credit and growth in investment, the Unnayan Onneshan cautions that sluggish rate of growth in private sector credit will further drag down investment and consequently slide down the expansion of the gross domestic product (GDP). Pointing to the increased non-performing loans and low returns on asset and equity, the think-tank observes that the sector is inundated with severe structural rigidities resulting in the disappointment of risk management in the sector. The Unnayan Onneshan recommends improvement in supervision and regulatory capacity of the central bank and streamlining of enforcement of prudential guidelines in order to check the incidences of scams and fraudulence and thus to ensure efficacy of risk management in the banking system.

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RECENT TRENDS IN AGRICULTURE, INDUSTRY, AND SERVICE SECTORS

MONTHLY BANGLADESH ECONOMIC UPDATE, FEBRUARY, 2016

MEU Oct 2015The issue of the Bangladesh Economic Update cautions that lower growth in agriculture, underperformance in medium and large scale manufacturing industries coupled with greater product and market concentration of export, and slow expansion of service sector may hinder the achievement of 7 per cent growth target.  Calling for adoption of strategies particularly focusing on the expansion of productive capacity, the Unnayan Onneshan advocates prudent harmonisation of macroeconomic policies that will foster agricultural growth, bolster industry, and expand service sector by creating adequate employment opportunities in the economy.

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