Strikes cut Bangla GDP up to 4 pct: World Bank

Dhaka, June 15: Bangladesh loses around 3 to 4 percent of gross domestic product annually on average due to general strikes, which paralyse transport, industries and other economic sectors, a World Bank statement said on Thursday.

The biggest financier of Bangladesh's development, which has also said weak governance and corruption undermine the economy, based its assessment on figures from a study by the U.N. Development Programme (UNDP).

The statement also said a forthcoming World Bank study suggests ''growth would have been 2 percent higher if economic governance had been improved, especially by strengthening the rule of law and streamlining the regulatory and administrative environment, a move that would reduce that cost of starting and doing business.'' Bangladesh's economy grew 5.4 pct in the fiscal year 2004/05 and it has projected growth of 6.7 percent for the current fiscal year to the end of this month.

Strikes are a regular form of political protest in Bangladesh.

A two-day strike called by opposition parties this week to press for electoral reforms ahead of next January's elections shut down most transport, factories, schools and the country's two main stock exchange in Dhaka and the port city of Chittagong.

Politicians insist strikes are an essential tool to force the government to accept demands, but business leaders say they cause huge losses and damage the economy.

Obaidul Karim, chairman of the Orion Group, a leading Bangladeshi industrial conglomerate, says they cost the country about million a day in lost production.

Analysts say the strikes occur in the absence of sound policies, but their impact is often over estimated.

''The immediate losses from the general strike are often over estimated while they are not as much ... because during strikes the production in agriculture and other informal sectors goes on,'' said Debapriya Bhattacharya, executive director of the Centre for Policy Dialogue, a private sector think-tank.

''But the potential losses of strikes are enormous because they undercut the confidence of the international buyers and investors,'' he said.

Praful Patel, vice president of the World Bank for the South Asia Region, said the power sector was one area with a corruption problem that could hamper growth.

Patel, who came to Dhaka in May for the launching of the World Bank's Country Assistance Strategy for Bangladesh 2006-2009, said: ''I am worried that next year and even in the next 12 months, the power shortages, the gaps and the blackouts are going to be very disruptive to the growth process.''

Reuters