Bangladesh's economy is expected to grow six percent next fiscal year despite the abolition of quotas for textile exports that was predicted to cause massive job losses, the International Monetary Fund said in a report posted Tuesday. The economy grew 5.5 percent in the fiscal year ended June 30.
The IMF forecast is in line with a finance ministry budget estimate in June that said the economy was recovering from devastating floods last summer and had coped well in textile exports despite the loss of quotas that opened up competition with larger rivals such as China and India.
The international textile quota system, known as the Multifibre Arrangement, was abolished at the end of December 2004 prompting predictions that as many as one million jobs would be lost in Bangladesh.
In the year to June 2004, Bangladesh exported goods worth 7.56 billion dollars with textiles accounting for 75 percent.
"Looking forward, (the IMF) underscored that Bangladesh faces the key challenges of accelerating growth and maintaining macroeconomic stability while overcoming the potentially significant impact of the MFA phaseout," the IMF said.
The economy is also poised for moderate inflation, but rising imports, especially for petroleum pose a risk, the IMF said.
"Oil imports are estimated to exceed forecast levels significantly," it added.
The IMF said the country's imports had grown rapidly due to higher oil and commodity prices, an increase in food imports, and stronger demand for investment goods.
Bangladeshi Finance Minister M. Saifur Rahman said Monday the country had already had to spend 500 million dollars more than planned last year because of rising international oil prices.