Political and religious militancy threaten to upset an economic growth record that could lift Bangladesh into the middle income country category in the next few years, according to the World Bank’s chief economist Kaushik Basu.
The country’s economy could grow at 6.5 percent in this fiscal year to end June 2016 and that rate might rise to 6.7 percent in next fiscal year, Basu, who is also a senior vice president of the Bank, said.
“It may even hit 7 percent if Bangladesh can efficiently address some of its (economic) weaknesses and also handle properly its political issues and militancy,” he said.
“Political problems exist in several countries, so Bangladesh is not different, but they can be lessened by economic activities and development work,” he said.
The country has suffered a rising tide of political tension over the past year. Part of that followed a government decision to hang two opposition leaders last month for war crimes committed during the 1971 war to break away from Pakistan.
Violent Islamists have also launched a campaign against their critics over the past year, killing four secularist writers and a like-minded publisher, as well as two foreigners – from Japan and Italy – working in the country. One blogger was a United States citizen of Bangladeshi origin.
Islamic State claimed responsibility for the deaths of the two foreign workers but the government denied the Mideast-based movement has a foothold in the country.
Basu noted that political militancy threatened stability in many Middle Eastern and African countries. “Bangladesh should look into it because it is a setback for its economy,” he said.
Political violence is common in Bangladesh, which has been alternately ruled by the Awami League, which is now in power, or the Bangladesh Nationalist Party for the past 24 years.
Basu advised substantial infrastructure investment, especially in energy, ports and communications, as that would help raise ready-made garments export to more than double from $25 billion (£16.5 billion) now.
Ready-made clothing is a lifeline of the country’s economy, making Bangladesh the second-largest garment exporter after China.
Bangladesh invests only $3 billion for infrastructure at present, instead of the $12 billion that development partners think it should be spending.
Basu also suggested cutting back bureaucracy to reduce the cost of business. Private sector investment has been stagnant as the credit flow from banks to the private sector remains below the target set in Bangladesh Bank’s monetary policy.
The target for the period of July to December is 14.5 percent while the real credit growth is 13 percent.