World Bank2014-01-282014-01-282013-10https://hdl.handle.net/10986/16644Economic performance has remained resilient to global headwinds and disruptive politics in Bangladesh in FY13. Gross Domestic Product (GDP) growth decelerated for the second year in a row to 6 percent. Disruptions caused by political strife, deepening political tensions relating to the impending political transition and the inadequacies of improvements in the provision of power, gas and infrastructure were the key factors in the growth slowdown. These contributed to weakening investor confidence leading to a 1.2 percent decline in the private investment rate. Recovery in remittance growth contributed to sustaining private consumption growth which combined with a significant rise in public investment and robust increases in exports helped maintain GDP growth above the average 5 percent growth in developing countries in 2013. Growth declined in both the agriculture and service sectors while industrial growth increased slightly. Inflation decelerated but remained high. Annual average inflation declined from 8.7 percent in FY12 to 6.8 percent in FY13. External balances have improved further. The external trade deficit decreased significantly due primarily to an increase in export growth over FY12 and flat import payments. The banking system remains under stress and capital market activities have been weak. Several financial scams and resultant loan defaults in the state-owned commercial banks moved them into a position of insolvency, which needs to be urgently addressed. The most pressing challenges lie in maintaining economic and financial reforms, rebuilding the image of the garment sector, and removing supply bottlenecks. Some structural reforms have moved forward. The International Monetary Fund's extended credit facility is on track with significant progress in strengthening macroeconomic conditions and structural policies under the extended credit facility arrangement. The new value added tax law has moved firmly into the implementation phase; the National Board of Revenue has introduced an online tax registration system; amendments to the Banking Companies Act have been passed and progress is being made in identifying critical weaknesses in the state-owned commercial banks; the FY14 budget introduced revenue reforms such as increasing the corporate profit tax rate on cigarette manufacturing companies and reducing the nominal protection rate to 28.1 percent in FY14 from 28.9 percent in FY13. Removing Bangladesh's favored access to the United States market under the Generalized System of Preferences program may not hurt Bangladesh's garment industry unduly. If the European Union were to suspend Bangladesh's favored access to its markets, Bangladesh could see its total exports fall by as much as 4.1 to 8 percent.en-USCC BY 3.0 IGOadverse impactAggregate demandAgricultural outputagriculturearrearsauctionbalance of paymentbalance of paymentsbanking sectorbanking systembase yearbenchmarkbeneficiariesbeneficiarybonded warehousebroad moneybrokeragebrokerage housebudget deficitcapacity constraintsCapital accumulationcapital flightcapital marketcapital market activitiescapitalizationchild laborcommercial bankscommodity pricescompetitive advantagecompetitivenessconflict of interestconsumer demandconsumer goodsconsumer price indexconsumersconsumption growthcontingent liabilitiescontract enforcementcorporate governancecorporate profit taxcost functionscredit growthcurrencycurrency depreciationdeficit financingdeficitsdepositsdeveloping countriesdisbursementDisbursementsdomestic creditdownward pressuresdurableEconomic DevelopmentsEconomic performanceexcess supplyExchange Commissionexchange rateexchange ratesexpenditureexport growthexportersexportsExternal balancesexternal tradeexternal trade deficitFederal ReserveFederal Reserve Bankfinancial institutionfinancial intermediationfinancial reformsfinancial sectorfinancial systemfiscal deficitfiscal deficitsFiscal policyfixed investmentfood pricefood pricesforeign direct investmentforeign exchangeforeign exchange marketsforeign exchange reserveforeign exchange reservesforeign financingforeign investorsfraudfraudsGDPGeneralized System of Preferencesglobal economyglobal marketsgovernment accountsGovernment expendituregovernment policygrowth rategrowth ratesholdingholdingsHousehold Incomehuman developmentimportimportsincome taxincome tax exemptionindividual investorsInflationinflation rateinflation ratesinflation riskinflationary pressureinflationary pressuresinformation systemsinfrastructure investmentsinstitutional investorsinsuranceinterest costinterest rateinterest ratesinternational financial marketinternational marketinternational marketsinternational pricesinternational standardsinventoryinvestinginvestment bankinvestment climateInvestment Corporationinvestment rateinvestor confidenceJoint Stock Companieslabor standardsLetters of Creditlevel of inflationliquidityloanloan balancesloan classificationloan defaultslong-term loansM2macroeconomic conditionsMacroeconomic Policymacroeconomic stabilizationmarket capitalizationmarket diversificationmarket exchange ratesmarket indexmarket ratemarket sharemarket sharesmaturitymonetary disciplinemonetary policynational savingnominal exchange rateNPLoil pricepledgespolicy responsepolitical strifepolitical turmoilpolitical uncertaintiespolitical uncertaintyportfoliopreferential market accessprice increasesprice movementprice movementsprivate consumptionprivate investmentprivate sector creditproduction costspublic debtpublic investmentpublic investmentspurchase pricepush factorsreal exchange rateReal GDPrecessionrecurrent expendituresregistration systemregulatory capacityregulatory captureregulatory oversightremittanceremittancesreservereturnreturnsSafety Netsecuritiesshort-term borrowingslowdownsmall investorsstock exchangesstock marketstock market volatilitiesstock pricesstocksstructural reformssupply disruptionssupply sidesupply-sidesurplustaxTax collectionstax ratetechnical assistancetotal exportstotal investmenttrade deficittrade uniontrade unionstradingtransparencyTrust Fundsvalue addedwage rateswageswealthworking capitalWorld Bank10.1596/16644