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16 BUSINESS

SUNDAY, MAY 31, 2015

Study: Export diversification to come by 2030 n Tribune Report Bangladesh trade liberalisation efforts with neighbours in Asia could help the country diversify its exports in next 15 years and maintain competitiveness in the apparel sector, says a new report. According to the HSBC trade forecast report released yesterday, Bangladesh has made good progress towards liberalising trade flows with its neighbours in recent years. The report said the progress should help it maintain its competitive advantage in clothing and apparel, as well as encouraging diversification into other higher value sectors such as electronics. India and Bangladesh already have a free trade agreement in place while China allows Bangladesh some preferential trade access and has recently suggested entering into ne-

gotiations on a possible free trade agreement between the two countries. The report said trade prospects are bright, particularly in the textiles sector riding on its low wage level relative to China, and youth population. The higher growth of the textile sector will also gradually raise productivity and move into higher-value lines, it said. The report said Bangladesh has a strong foothold in the global market for ready-made garments and the sector is expected to generate 80% of export growth in next 15 years. Although the importance of agriculture to the economy will gradually decline as more of the population moves into urban areas, agriculture will continue to be Bangladesh’s second largest export sector out to 2030, contributing around 7% of the forecast increase in exports in 2015-30, according to HSBC.

Despite the suspension of generalised system of preferences by the US, Bangladesh remains largest export partner, accounting for around 15% of total exports in 2013. The eurozone as a whole accounts for more of Bangladesh’s exports than the US, and “we expect Germany to remain Bangladesh’s second largest export market over the forecast period.” But Bangladesh is also exporting to a number of fast-growing emerging markets, which will increase in importance as export destinations. In particular, exports to Turkey will grow by 13% a year in 2021-30, propelling it past France into fourth position by 2030. India and China will also be fast growing export markets for Bangladesh. Exports to India are forecast to grow by 18% a year from 2015-20, assisted by the South Asia Free Trade

Agreement which first came into force in 2006. The report said industrial machinery and transport equipment could contribute a quarter of import growth in the decade to 2030. China and India will retain their positions as Bangladesh’s largest import partners by 2030, reflecting the rapid growth of these economies, both of which are forecast to grow by at least 5.5% in the decade to 2030. The import needs of the electronics sector will also increase as Bangladesh diversifies its export base. “But we expect the economy to continue to run a trade deficit in electronics over the forecast period,” HSBC said. The lower fuel price environment is also a good opportunity for the government to implement much-needed power sector reforms to encourage investment, it added. l

Data shows Indian growth outstrips China’s but economists doubtful n Reuters, New Delhi

US warns G7 of global economy ‘accident’ without Greece deal n Reuters, Dresden

India’s economy grew faster than China’s in the quarter through March, data showed on Friday, but a sharp downward revision for the previous quarter fuelled doubts about the accuracy of a new method used to measure economic activity. Asia’s third-largest economy grew 7.5% year-on-year in the last quarter, according to the data, outstripping China’s 7% growth in the same quarter and beating a Reuters poll of economists who forecast 7.3% growth. India also celebrated faster growth than its larger neighbour in the December quarter, but on Friday the Central Statistics Office sharply revised growth down to 6.6% from 7.5%, further distorting the picture. “At face value, today’s GDP figures for (January-March) suggest that India is the fastest-growing major economy in the world,” said Shilan Shah, India Economist at Capital Economics. “In reality though, the GDP data remain wildly inconsistent with numerous other indicators that point to continued slack in the economy.” Economists were already having a hard time reconciling the headline numbers with dismal corporate earnings, weak industrial ac-

The United States warned on Friday of a possible accident for the world economy if Greece and its creditors miss their June deadlines to avert a debt default. Germany said there was no sign of a breakthrough. With Athens struggling to make repayments due next month, the debt stand-off between Greece and its European Union partners overshadowed a meeting of policymakers from the Group of Seven rich nations otherwise held to focus on ways to get the global economy growing strongly again. US Treasury Secretary Jack Lew repeated warnings not to minimize the global stability risk of Greece sliding out of the euro zone, even if most of its debt is no longer held by commercial banks. “There is great uncertainty in there at a time when the world needs greater stability and certainty,” Lew told reporters after the G7 meetings. Greece, which has been stuck in a deep debt crisis for the past five years, is due to pay back 300m euros ($329.61m) to the International Monetary Fund next Friday, although the IMF has said that deadline could be pushed back until later in June. l

Labourers work at the construction site of a building in Ahmedabad tivity and an elusive recovery in bank credit. Full-year growth for the fiscal year ending in March came in at 7.3%, data on Friday showed, up from 6.9% in 2013/14, a tad lower than an official estimate of 7.4%. Back in December, the government estimated growth for the year would be 5.5% using the old methodology. That would have

REUTERS

represented a modest improvement after two successive years of growth below 5% - the worst in a quarter century. But the Statistics Office’s reworking of the numbers has transformed India’s official growth pace under Prime Minister Narendra Modi, who made economic reforms a priority during his first year in office. l

G7 agree in principle on China joining IMF’s major league n Reuters, Dresden

Finance chiefs from the Group of Seven industrial nations agreed on Friday that including China’s renminbi in the International Monetary Fund’s currency basket is desirable, but a technical review must be completed first. The inclusion of the renminbi, also known as the yuan, as part of the IMF’s unit of account would mark another stage in China’s rise as a global economic player, requiring the United States to accept a dilution of its power in international finance. German Finance Minister Wolfgang Schaeuble, who hosted the G7 meeting in Dresden,

said the finance chiefs discussed the possible inclusion of the renminbi in the basket of currencies that makes up the IMF’s Special Drawing Rights (SDR). The SDR is a virtual currency that defines the value of IMF reserves, used for lending to countries in financial difficulty. “We were completely agreed that it is desirable in principle, that the technical conditions must be examined, but there are no politically divergent views on this,” Schaeuble told a news conference at the end of the two-day meeting. The renminbi is already the world’s fifth most-used trade currency. Beijing has made

strides this year in introducing the infrastructure needed to float it freely on global capital markets. Japanese Finance Minister Taro Aso said he welcomed China’s intention to reform its yuan currency and that progress on liberalising China’s capital market should pave the way for the yuan to satisfy the IMF’s criteria as global currency. Including the yuan in the IMF basket would increase China’s influence at the Fund - an institution Washington was instrumental in designing and through which it has projected ‘soft power’ for the last 70 years. China would be the first emerging market

currency to join the basket that comprises the dollar, the euro, the yen, and the pound sterling. But Schaeuble played down the chances of China being given the green light this year. “Whether the renminbi will be included in autumn already is a decision the IMF must make. It seems a bit optimistic to me,” Schaeuble said. “There is still a series of technical questions to be clarified and not just technical questions. It would be wrong, precisely because we have complete agreement on the aim, to make this process harder by putting inappropriate time pressure on.” l


31 May, 2015