http://www.theindependentbd.com/business/banking/32945-industrial-output-rises-1531pc-bb-report.html
Industrial output rises 15.31pc: BB report
BSS
DHAKA, Feb 5: Country’s industrial sector has started getting better with increasing output amidst energy crisis, but on supportive lending rate and rising demands on both domestic and global markets.
The general index of industrial production including medium and large scale manufacturing stood higher at US $489.24 million in July 2010, recording an increase of 15.31 per cent over July 2009 when the total output was US $424.28 million, Bangladesh Bank (BB) monthly economic update for January said. The significant year-on-year figures came on the back of double-digit growth in jute, cotton, knit apparel, leather, food, beverage, tobacco and basic metal product. Indices recording increase in July 2010 compared to the same month of the preceding year are: jute, cotton, knit apparel and leather 20.93 per cent, food, beverage and tobacco 17.85 per cent and basic metal product 12.20 per cent.
Outputs from the other areas also increased with improvement demands on the market. These include non- metallic product 6.28 per cent, wood product including furniture 4.82 per cent, chemical, petroleum and rubber 4.68 per cent, fabricated metal product 3.92 per cent and paper and paper product 0.04 per cent.
BB’s data also showed increasing trend in the opening and settlement of LCs (letters of credit) for industrial raw materials and capital machinery, indicating further rise of industrial output this year. According to the January update of the central bank, LCs amounting US$6572.17 million were opened during July- November last year compared to US $3994.30 million for the same period in 2009 for importing industrial raw materials.
The rise in opening of LCs was an overwhelming US $2577.86 million when the rate of LCs settlement was also higher extensively by US $1409.07 million to US $4671.27 million in July-November, 2010 from US $3262.20 million in July-November 2009.
Similarly, the amount of opening of LCs for importing capital machineries was US $1397.72 million in July- November2010 compared to US $685.18 million in the same period in 2009.
The increase in the opening of fresh LCs was more than double with an additional amount of US $712.54 million. The rate of settlement in the past five months until November 2010 was around four times higher to US $778.20 million from US $202.49 million for the same period last year. The data for increased industrial output is the latest in a series of encouraging figures pointing to higher economic growth in the coming years from the annual six per cent-plus levels the country logged for several years.
BB’s earlier data showed a sharp rebound of export earning, which was slow last year due to tail affect of global recession. The positive industrial performance is expected to help offset the impact on overall economic growth of energy crisis, which hurt domestic production especially the manufacturing sector.
Analysts attributed the central bank’s lending policy to the healthy growth in the industrial sector, which is vital to achieve sustainable GDP (gross domestic product) growth.
The central bank last year capped the lending rate to 13 per cent for industries while it tightened cash flow from banks to non-productive sector and risky areas. Some bankers apprehended the rise in industrial output could raise pressure on the central bank to hike interest rate to control inflationary pressure, but officials at the banking sector’s watchdog ruled out any such move before the end of this current 2010-11 financial year. The leading think-tank Centre for Policy Dialogue (CPD) in its annual report on the state of Bangladesh economy said industry sector, particularly manufacturing, would have to take the lead if growth target for the current 2010-11 is to be realised. The government targeted 6.7 per cent for the current financial year.
The industrial sector is the second highest contributor to GDP, but its share rose marginally in the past 10 years with an increase to 1.8 per cent in 2010 from 1.5 per cent of 2000.
Share in the GDP of the top contributing service sector rose to 3.6 per cent from 2.8 per cent during the same time, the CPD report said.
The contribution of agriculture sector declined in the past 10 years to 0.7 per cent in 2010 from 1.5 per cent in 2000.
