Bangladesh can become a middle-income country by 2016 if it raises its GDP growth a little more to a sustained 7.5 percent a year, the World Bank (WB) country director said on May 15. At the current pace of growth, Bangladesh will become a middle-income country by 2023, Xian Zhu further said. He was speaking at the monthly luncheon meeting of American Chamber of Commerce in Bangladesh (AmCham) in Dhaka.

Achieving a 7.5 percent growth per year could be challenging but not impossible, Zhu said. “GDP growth in China has averaged over 9 percent since 1975, while Korea and Thailand each attained 8 percent growth for two decades and India is now close to joining this group of high growth performance.”

On the recent growth performance of Bangladesh, he said resilience of its economy was demonstrated once again in fiscal year 2006-07, a year in which the country is going through a very difficult period of political transitions. On the projected growth, the WB country director said Bangladesh appears to be achieving over 6.5 percent GDP growth in FY07 compared with 6.7 percent in FY06 and 6 percent in FY05. “This is a creditable performance by any standard and particularly considering the internal disturbances the economy had to weather in the first half of FY07.”

He identified three challenges-diversification of export basket; improvement in investment climate by improving power supply, port operations and regulations; and access to long-term finance- for achieving the growth projection. “Bangladesh’s export basket is becoming less, rather than more, diversified,” he said, stressing export diversification as one of the two specific challenges to raise the country’s growth performance to make it a middle-income country by 2016.

Inflation remains high around 7 percent as against an average of less than 4 percent over FY 01-05. The main underlying cause is rising food price, Zhu said.

Appreciating various efforts of the present government, he said it deserves credit for achieving dramatic improvements in the functioning of Chittagong port in recent months. He also praised its initiatives for improving governance.