The overall output growth of fiscal 2007 in Bangladesh is still likely to be close to 6.6 percent in spite of a decline in agricultural output, local daily The Financial Express reported Tuesday.

The forecast was made in the Bangladesh Bank Quarterly's (BBQ) October-December 2006 issue released Monday.

"There are indications of domestic as well as external supply side pressures on the price of food items (particularly daily essentials)," the BBQ's latest edition said.

Over the next quarter or two, the monetary policy measures, according to the latest issue of the BBQ, will have to be well coordinated within administrative and fiscal measures in order not to lose the grip on inflationary expectations while keeping the growth targets in sharp focus.

It said though the international price of oil has moderated greatly in this fiscal, "the benefits to Bangladesh inflation on this account will be mostly indirect due to better price of energy- intensive imported commodities as well as through the budgetary impact and financing thereof."

Bangladesh Bank (BB), the central bank, said in order to catch up to the cost of imported oil, domestic prices have just been announced to go up immediately, which will result in a one-shot increase in consumer price index (CPI) followed by a round of gradual adjustment.

However, given the low weight of energy in CPI, the net impact is unlikely to be significant. But in terms of the well-being of the poor, whose livelihood is dependent on the use of kerosene and diesel, the toll is likely to be significant unless alleviated through targeted means of transfers, preferably in cash.

The BB publication said credit and deposit behaviour indicate the existence of some excess demand-driven pressure on the price level.

Source: Xinhua