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Economy

Banking sector plagued by financial scams, weak monitoring: UN report

These might cause macroeconomic risk in the near term

08 May 2018,Tuesday, 22:37



United Nations Under-Secretary-General and ESCAP Executive Secretary Dr. Shamshad Akhtar. Photo: Collected

United Nations Under-Secretary-General and ESCAP Executive Secretary Dr. Shamshad Akhtar. Photo: Collected

The banking sector in Bangladesh has been plagued by financial scams, non-performing loans and weak monitoring problems, which might cause a macroeconomic risk in the near term though Bangladesh is expecting faster growth, says a UN report.

In Bangladesh, the report says, robust growth has been supported by domestic demand, especially large infrastructure projects and new initiatives in the energy sector.

Remittance flows have also started to increase with the increase in global oil prices, according to the Economic and Social Survey of Asia and the Pacific 2018.

Mobilizing financing for development remains a fundamental priority in the Asia-Pacific region, said the report.

The robust growth registered by the region in 2017 and forecast to continue this year provides the opportunity to meet this objective, according to a major United Nations report launched in Bangkok on Monday.

The report advises countries in the region to take advantage of the current favorable economic conditions to address vulnerabilities and enhance the resilience, inclusiveness and sustainability of their economies.

Implementation of several policy initiatives will require mobilizing domestic public financial resources and leveraging private capital, the report noted.

According to the annual Economic and Social Survey of Asia and the Pacific, developing economies are estimated to have sustained a relatively high economic growth rate of 5.8 per cent in 2017 compared with 5.4 per cent in 2016.

About two thirds of the regional economies, accounting for more than 80 per cent of the region’s GDP, achieved faster economic growth in 2017 than in the previous year.

The recent recovery in global manufacturing, investment and trade is providing a tailwind to the already steady expansion of economic output in the Asia-Pacific region.

In addition to robust consumption, investment expenditures and trade volumes, which showed lukewarm growth in recent years, showed signs of recovery in 2017.

Firmer global demand and increased public infrastructure outlays supported the uptick in trade and investment.

The report points out that due to robust domestic demand and improved global economic prospects, developing economies in the region are projected to grow by 5.5 per cent in both 2018 and 2019, with a slight moderation in China offset by a recovery in India and steady performance in the rest of the region.

However, this diagnostic does not imply that there are no risks or challenges. Potential financial vulnerabilities along with high private and corporate debt, particularly in China and some countries in South-East Asia, declining or low foreign exchange reserves in a few South Asian economies and uncertainty concerning trends in oil prices must be closely monitored.

“With regard to the medium-term outlook, potential economic growth is on a downward trend in several countries owing to population ageing, slower capital accumulation and modest productivity growth,” said United Nations Under-Secretary-General and ESCAP Executive Secretary Dr. Shamshad Akhtar during the launch of Survey 2018.

At the same time, “rapid technological advancements, while promising immense opportunities are also posing considerable challenges in terms of job polarization and income and wealth inequalities,” Dr. Akhtar added.

“The bottom line is that the prospects for mobilizing financing for development purposes are promising,” Dr. Akhtar concluded.

 

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