Asian Development Bank (ADB) has made a forecast of 6.5 percent GDP growth in Bangladesh in 2007 fiscal, a 0.2 percent fall compared to the last financial year, assuming a check in any further potential momentum in growth by political instability and power shortfall. Growth is expected to moderately reflect more normal agriculture growth following the last years post-flood high growth, stated the ADBs Bangladesh Quarterly Economic Update, December 2006 released on February 25.

However, the report also stated, The country faces several downside risks in its near to medium-term prospects. These include political disruption and infrastructure constraints, including power shortage. The ADB report stressed significant improvement in the infrastructures, including power and transport, to sustain higher growth over the medium term. In Bangladesh, per capita energy generation is only 158 kilowatt-hours a year, among the lowest in the world. Only one-thirds of the population have access to electricity. In recent years, the power situation has worsened because of load-growth outstripping supply capacity expansion, and slow progress in reforms, it added.

Bangladesh needs substantial investment to handle the gigantic task of meeting the growing energy reform. Plus it should adopt a cost-reflective power tariff structure, establish the northwest power generation company and take up other measures to organise and streamline its various power entities, the ADB observed.

On the Chittagong Port, the ADB says, the cost of export for each container in Bangladesh is $902 compared with $797 in Sri Lanka and $481 in Malaysia. For Chittagong Port, the focus should be on contracting out operations to the private sector, outsourcing management of the new container terminal to a private operator, allowing the private sector to invest in port infrastructure and restructuring port management. It proposed offloading the shares of state-owned petroleum distribution companies and Bangladesh Biman to boost market activity.

The ADB also encouraged major mobile phone companies with big annual turnovers to also offload some of their shares to the stock market to facilitate the process of boosting market capitalisation and trading activity. In the report, the ADB also blamed weak corporate governance, lack of good quality shares and inadequate or irregular participation by large institutional investors for Bangladesh’s capital market lagging behind other South Asian countries.

The report found that Bangladesh’s market capitalisation to GDP ratio of 7.5 percent was boosted by a pickup in the exchanges, but since it lags behind other South Asian countries, entrepreneurs here have difficulties to finance new businesses. Additionally, small savers and investors are marginalised from sharing the benefits of higher economic growth and corporate profits, the report added.