Bangladesh's imports of capital machinery fell by nearly 10 percent to $366 million in the first quarter of this fiscal year, hit by a slowdown in business investment, a central bank document showed.
The slide in capital machinery imports will likely result in slower industrial growth, economists said. "Despite measures taken by the central bank to encourage importers, including the relaxation of credit margins, extension of time and easier lending conditions, the amount of imports did not pick up," said the document seen by Reuters on Wednesday. Capital machinery imports rose by nearly 30 percent in the same period of the previous fiscal year ended in June, it said.
Restoring business confidence remains a challenge for the country's army-backed interim government which took over in January following months of political violence, and imposed a state of emergency to bring order back, economists said. Bangladesh's private sector-led economy is still sluggish and will unlikely rebound until the government holds elections that it has promised by the end of next year, analysts said.
"A prevailing lull in long-term investment...will have a negative impact on industrial growth," said Mustafizur Rahman, head of the Centre for Policy Dialogue, a private think tank.
An anti-corruption campaign launched by the interim authority has so far detained two former prime ministers and more than 170 other key politicians and businessmen. The drive to root out corrupt politicians and bureaucrats has scared away industrialists and potential business ventures.
In the last fiscal year ended in June, the industrial sector grew 9.5 percent but such growth might not be possible this year, said Mustafizur, formerly a professor at Dhaka University. But central bank officials said they were hopeful that the government's recent measures would improve business confidence.