Analyst:

Asif Khan, CFA

asif@bracepl.com

We see 2014 to be very important in deciding the future of the country and politics
could play a major role in that. Economic activity in terms of investment, credit
growth, import etc is likely to be subdued at least till the first half of the year. On the
bright side, the strong foreign exchange reserve minimizes the risk of a currency
crisis, while relatively benign inflation will allow space for monetary stimulus.
Furthermore recent developments in the political arena indicate that the worst case
scenario is a low possibility as the opposition has called off strikes till further notice.

Despite a relatively mixed outlook in terms of economy, we do expect total
corporate earnings of the listed universe to show growth after three consecutive
down years (primarily due to financial sector earnings drop). However, the 12M
trailing P/E multiple of 18.2x indicates that some of this growth has already been
discounted in the market.

A quicker resolution to the political stalemate will be an upside risk in our view.
Things to observe carefully would be the 1. Political developments 2. Health of the
banking sector and also the 3. RMG sector which came under increased scrutiny in
2013.

Introduction
2014 was supposed to be the year of opportunity where the stock market would
finally get out of the 3 year long bearish run which saw the market fall by around 50-
60%. It was supposed to start with election related festivities which usually bring a
lot of hope and excitement. Unfortunately for us, the lack of progress on
negotiations between the major parties has put in a dampener right at the beginning
of the year. The 10
th
general election faced a credibility problem as the main
opposition BNP decided to boycott it. Now everybody is looking towards how the
political situation evolves as it is the deciding factor for the long term growth
trajectory of the country.

As politics is the centerpiece of this report we will first give an update on the political
scenarios and their implications. Then we will take a quick look at the 2013
macroeconomic performance and provide an outlook for 2014 along with the
implications for the market.

A positive shift in politics observed
The recent developments in the political arena have some clear positives and we
feel that the worst case scenario has been averted. Businesses and the economy
will see a breathing space as the opposition has changed their strategy of
continuous strikes and blockades. Meanwhile the ruling party also has strong
incentives to win back the people through good governance before another election.



Earnings recovery anticipated after three down years
Macroeconomic and Strategy Report
January 15, 2014
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4
Turnover (BDTmn) (RHS) DSEX(LHS)
Index Data
Current Index DSEX 4,494
52 week High 4,494
52 week Low 3,439
2013 Return* 5.20%
Market Cap (BDT mn) 2,754,034
Market Cap (USD mn) 34,861
ADTV in 2013 (USD) 51
Market and Turnover
2
Macro and Strategy Report

Opposition has shifted away from aggressive stance

We feel that the opposition has realized that the continuous strikes will not
lead to any benefit for them and this leg has been won by the ruling party.
The opposition has already stopped strikes and blockades for the time
being. They have announced programs for 30th January with one solitary
strike on 29th in stark contrast to the last few weeks. On January 15th the
opposition Chairperson Khaleda Zia in a speech also urged the government
to hold another elections as soon as possible.

Furthermore we have also seen that the effectiveness of the continuous
strikes has been declining over time. People in the metropolitan cities were
ignoring the strikes and companies were adopting strategies to work
despite the problems. The political strength and organization structure of
the opposition BNP has also been weakened considerably. As such, even if
they wanted to it would be very difficult for them organize massive unrest
across the country. They will continue to try to get diplomatic backing of the
international community namely USA and the EU which have asked the
government to hold another election.

Ruling party has incentive for winning back popularity

Recent opinion polls suggested that opposition alliance had higher
popularity than the ruling party. So, ruling party has a clear incentive to take
time and work as hard as possible and win the people back. Some signs
are quite clear like the selection of the new ministers. Some of the more
controversial names have been replaced by new names. We are thus
cautiously optimistic on the governments activities.

Furthermore while many nations have asked the government to hold
another election there are no binding time lines since they are in
conformation with the constitution. The probability of international sanctions
being imposed is almost zero and the US government has already
announced that they will work with the current government (while insisting
Political Scenario Analysis
Scenario Description Economic implication Company Implication Probability
Bull
Both parties will negotiate and come to a
settlement. Peaceful elections will
happen with smooth transition of power.
Rapid recovery in
economic activity and
investment as well.
Banks could lead the
rapid recovery but non-
banks will also benefit.
Moderate
Base
Opposition will stop blockades and
strikes and instead try other avenues to
push the government for another
election. Government will meanwhile try
to focus on good governance to try to
increase their popularity.
Business activities will
resume normalcy but
real sector investors
might go for wait and
see policy.
Banks would see
earnings revive from
lower base but loan
growth might remain
low. Non-banks will do
business as usual.
High
Bear
Government will hold on to power while
opposition will continue to hold strikes
and blockades
Broader macroeconomy
will suffer with financials
taking the worst hit.
Almost all companies
impacted negatively.
Gas utility will be
relatively defensive.
Low
3
Macro and Strategy Report

that a new election is also required).

We feel that government will try to linger its tenure but will still try to deliver
results so that, if anytime they need to hold elections, they have a fair
chance of winning.

Chances of election looks slim in 2014

There are significant bottlenecks that have to be addressed before election
can take place. We really cant put in a timeline but we are of the opinion
that the probability is low in 2014 because

1. The two parties are yet to agree on the model of poll-time government.
Neither party have moved from their initial stance.
2. Even if poll time governments model is agreed the opposition will
surely demand a revamp of the Election Commission which it alleges
was completely biased. Restructuring of election commission will be a
leading indicator.

Macro outlook based on base case

As we feel that the base case has the highest probability for 2014 we have
formulated our forward looking views based on that. The next segment
contains our analysis of 2013 and views about 2014.
4
Macro and Strategy Report

The good...
Unprecedented growth in FX Reserves

In terms of FX reserves, 2013 was a year of setting new records. Helped by
declining imports, resilient exports and remittance there was an expansion in the
current account surplus which helped the FX reserve rise from USD 12.7 bn to USD
18.04 bn. BDT also appreciated against the dollar by 3.5% and would have gained
more if the central bank had not pursued open market policy of buying dollars from
the commercial banks. In order to help exports retain competitiveness, the central
bank has been actively buying dollars from the market. We feel that this policy will
continue in 2014 as well.



































The current account surplus will continue in 2014 as imports will remain weak.
However, we must highlight one risk to remittance growth. Starting from late 2012
manpower exports came down sharply and has stabilized at that level. The
Economist (Revenge of the migrants employer?) clearly showed that manpower
exports to Saudi Arabia declined for Bangladesh while it grew for Pakistan. Thus we
fear that remittance growth will not be as strong as it had been in the past.


However manpower exports (RHS) slowed down
Source: Bangladesh Bank
FX reserves rose rapidly
Source: Bangladesh Bank
Core inflation is within reasonable
levels
Pakistan grabbed larger share of
manpower exports to KSA
5
Macro and Strategy Report


















Relatively benign inflation and declining interest rates

Another positive development in 2013 was relatively low inflation. Helped mainly by
the declining non-food prices, inflation was kept relatively under control. The food
segment however saw some uptick towards the end of the year due to continuous
strikes by the opposition party that affected the supply chain. However, irrespective
of these supply side issues underlying inflation (usually signaled by non-food
inflation) we feel that inflation is not much of a risk because currency has become
stronger and demand side is not as strong as before.











Relatively benign inflation (YoY)
Source: Bangladesh Bank
Interest rate decline to continue in 2014
Source: Bangladesh Bank
Interest rates will come down but at a
gradual pace
6
Macro and Strategy Report

Despite multiple pressures RMG industry should sustain

RMG plays a vital role in the economy

The RMG sector is around 80% of our export basket and is thus a key driver of the
economy. It came under increased scrutiny in the global media due to a number of
high profile factory accidents, namely Tazreen garments and Rana Plaza. Following
the Rana Plaza accident that killed more than 1,100 people the USA removed the
GSP status for Bangladesh. That did not really affect the RMG industry because
USA never gave duty free access to Bangladesh RMG in any case. Nevertheless,
Bangladesh has agreed to improve its factory and labor safety standards as the EU
GSP (which accounts for 58.1% of the RMG exports) is critically important for
Bangladesh might be withdrawn if enough progress is not made. We are of the
opinion that RMG factory owners and the government have both taken this issue
quite seriously. We will be coming up on a special note on GSP and its impacts on
Bangladesh soon which should have more details on this issue.

Strikes impact margins but expected to slow down

The other worrying factor for RMG was the continuous strikes that affected the
supply chain both in terms of backward linkage and also distribution to customers.
In Q4 2013 many factory owners had to airlift finished products while the cost of
road transport went up by 2 to 4 times. Surprisingly export numbers have been quite
robust so far 17% in the first 6 months of the fiscal year (July-Dec 2013). This
indicates that despite the supply chain issues companies have been generally able
to dispatch the products. They were probably hit on the margins to some extent but
this should turn around once strikes stop.

Pakistans GSP Plus status is not a significant barrier

Another factor that could affect the Bangladesh RMG industry is the GSP Plus
status awarded to Pakistan by the EU which is effective from 1
st
Jan 2014. Pakistan
would probably be a direct competitor to Bangladesh. However, we think that the
replacement of capacity from China to other countries will continue and as long as
there is no issues with lead time both the countries can take a share of the pie.




















Minimum wage hike

The final issue to be discussed about RMG is the hike in minimum wage by around
77%. Despite this large hike Bangladesh still remains the cheapest in labor wage.
Minimum wage still low despite wage hike
Source: ILO (2013)
The EU RMG market is very impor-
tant for Bangladesh accounting for
58% of total RMG exports
Long term wage increases can be
offset through efficiency improve-
ments as productivity in Bangladesh
is very low
7
Macro and Strategy Report

Furthermore it takes time to build replacement capacity of such volume so quickly
and some alternate countries like Cambodia are having labor unrests of their own.
The government of Bangladesh has also given some incentives to the RMG players
including lowering of tax at source from 0.8% of revenue to 0.3% of revenue and
offering 5% cash incentive against exports.













































8
Macro and Strategy Report

The bad..
Slower GDP growth

GDP growth in 2013-14 was hurt by a number of factors including politics, low credit
off-take etc which prompted a number of international agencies like IMF, World
Bank and ADB to downgrade their growth estimates. At present they are forecasting
GDP growth of around 5.5-5.8% for FY2014. Even Bangladesh Bank has
downgraded their estimates as well. As we dont get quarterly numbers it is hard to
have a lot of conviction on the numbers but at present 5.5%-5.8% remains our base
case as well.

The fact that the economic activity has slowed down is also evident from some
indicators as well which we have highlighted below.

Falling imports




While exports fared relatively better, weak investor confidence was clearly evident
in the import numbers which were choppy throughout 2013. In particular import of
capital machinery (+2.9% YoY in 4MFY14) has been slow indicating weak investor
confidence. Going forward exports should see modest growth in 2014 as we feel
that opposition would slow down strikes but imports will remain on the lower side.

Real estate sector slowdown

According to REHAB (Real Estate and Housing Association of Bangladesh)
apartment sales declined 60% in 2013. Even though real estate price data is not
available we do have anecdotal evidence to believe that prices are coming down in
real terms, albeit at a slow pace.

Tax revenue collection

Political turmoil and some structural issues (conversion to e-TIN from normal TIN)
related to tax payment led to a drop in tax revenue collection. The tax collection in
the first 5 months of the fiscal year was around 30.7% of the annual target
according to National Board of Revenue data.



Choppy import figures indicate slowdown in economy
Source: Bangladesh Bank
GDP growth will be below 10 year
average of 6.1%
9
Macro and Strategy Report

Slower growth in election year is quite normal

Past data suggests to us that growth has always been a bit slower in election years.
Thus a slower than average growth rate of GDP is nothing to be alarmed about.
However, the decline in credit growth is clearly slower than usual election years.

















Banking sector affected by growing non-performing loans

The private commercial banks (PCB) have reported very dismal numbers with 9M
profit down 49.6% YoY. The primary reason of this was growing NPLs leading to
high provision charges. Gross NPL ratios for the entire sector grew from 8.7% in
September 2012 to 12.8% in September 2013 (for PCBs the respective numbers
are 4.9% and 7.3%). This growth in NPL was driven primarily by changing NPL
recognition rules which called for recognition in 90 days rather than the previous
180 days. However, a couple of loan scams at the state owned banks as well as
some NPL formation in a few specific industries such as shipbuilding, ship breaking
and commodity trading also led to the increase.

Given the political turbulence in 4Q13 we had earlier predicted that there was no
reason to be optimistic about the profit figures. However towards the end of the
December 2013, the central bank came out with a slightly relaxed rescheduling
guideline which will allow banks to reschedule loans without relevant customers
putting in the down payments for the next 6 months. Therefore, banks will have a lot
of discretion to decide on the earnings numbers for 4Q13 and the two quarters in
2014. Nevertheless we stick with our view that the better managed banks should
see earnings recovery in 2014 vs 2013 as the latter was affected adversely by one
off events.















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GDP growth comes down in election years
Source: World Bank
10
Macro and Strategy Report

The Ugly
Political violence and lack of consensus on election modality

Increased political activity and violence observed in 2013

The highlight of 2013 was definitely the increased political noise. After the negotia-
tions between the two major parties Awami League (AL) and Bangladesh National-
ist Party (BNP) failed, the ruling AL decided to organize the election with the exist-
ing ministers in power. The opposition led by BNP and its ally Jamaat tried its best
to thwart the elections by continuous strikes mostly towards the end of the year as
the elections were scheduled for Jan 5.

Opposition failed to stop the elections that were held on Jan 5th

Despite the oppositions best efforts the ruling party was successful in holding the
general elections on Jan 5 but with extremely low voter turnout of around 10-20%
(Usual turnout is around 70-80%) depending on various sources. Meanwhile, 153
out of the 300 seats were won uncontested without a single vote cast before the
election.

Change in oppositions strategy would give a breather to the economy

Meanwhile on Jan 11, Saturday the main opposition BNP announced that they
would stop observing strikes and blockades from Jan 13, Monday. We believe that
this signifies a change in the oppositions strategy which was crippling the economy
and they would try to get the help of the international community to pressure the
government for another election.

We have already covered the political implications in details at the beginning of this
report.

While the stopping of strikes and blockades is a definite positive for the economy
with far reaching consequences we believe that the long term direction of the econ-
omy would not be very clear unless an election with wide participation of people is
organized. Hence we may not see the resumption in private sector investments until
a political resolution is reached. Implications include slower growth.
507 people were killed in political
violence in 2013
AL won more than 50% of the seats
due to boycott by opposition
We are hopeful that opposition would
look at alternative to strikes and
blockades in their attempt to put pres-
sure on the government
11
Macro and Strategy Report

Market looks fairly valued but bottom up
opportunities exist
12M trailing P/E of 18.2x does not reflect complete story

As per our calculation the market is trading at a 12M trailing P/E of 18.2x which
looks quite expensive when compared to the markets history as well as peer
countries. However, we must point that the banking sector (20% of market cap) was
hit negatively by some one-off items. Similarly the two largest companies as per
market capitalization, Grameenphone and British American tobacco were hit by
increased tax rates which caused them to adjust taxes for the last 18 months. So in
normalized terms market P/E is lower. According to our coverage universe, the
forward multiple for 2014 would be 12.4x.

Despite decreasing interest rates hard to expect a re-rating without strong
earnings growth




Despite decreasing interest rates we feel that it would be hard to predict an upward
re-rating for the entire market without strong earnings growth, particularly from
banks or other catalysts especially on the political side. We thus advise our clients
to look at the market from a more bottom up perspective and focus particularly our
top picks which we have named below.

Both financial sector and non-financial sector should see earnings growth in 2014.
Financials would grow from the low base in 2013 but will not reach normalized
levels before 2015. Meanwhile non-financials should continue growing but growth
could be slightly slower depending on political situation.


Non-financials outperformed financials on 9M13 earnings (YoY)
Source: DSE
12
Macro and Strategy Report

Economic Indicators Growth
FY ( Jul- Jun) Unit s 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13( p)
Tot al Out put , Income, Spending, Savings and Ext ernal Sect or
Nominal GDP BDT bn 4,157 4,725 5,458 6,148 6,943 7,967 9,181 10,380
Nominal GDP, USD (bn) USD bn 62 68 80 89 100 111 116 133
Population mn 139 141 142 144 146 150 152 154
GDP per Capita, USD USD 435 475 547 691 766 844 868 960
GNI Per Capita, USD USD 500 520 747 829 912 943 1,044 923
Real GDP (Constant Market Prices) BDT bn 435 3,030 3,217 3,402 3,608 3,851 4,091 4,337
Real GDP (Constant Producer Prices) BDT bn 2,741 2,928 3,100 3,283 3,487 3,717 3,717 3,717
Real GDP Growth Rate % 7% 6% 6% 6% 6% 7% 6% 6%
Nominal GDP Growth Rate % 12% 14% 16% 13% 13% 15% 15% 14%
GDP Deflator % 5% 7% 9% 7% 6% 6% 8% 7%
Sect oral Share of GDP
Agriculture % of GDP 22% 21% 21% 21% 20% 19% 18% -
Industry % of GDP 29% 29% 30% 30% 30% 30% 30% -
Service % of GDP 49% 49% 50% 50% 50% 52% 52% -
Agriculture % cng 5% 5% 3% 4% 5% 5% 3% -
Industry % cng 10% 8% 7% 7% 6% 7% 9% -
Service % cng 6% 7% 7% 6% 6% 6% 6% -
Consumpt ion
Public % of GDP 6% 6% 5% 5% 5% 6% 6% 5%
Private % of GDP 74% 74% 74% 75% 75% 75% 75% 75%
Total Consumption % of GDP 80% 80% 80% 80% 80% 81% 81% 81%
Invest ment
Public % of GDP 6% 5% 5% 5% 5% 6% 6% 8%
Private % of GDP 19% 19% 19% 20% 19% 20% 20% 19%
Total Investment % of GDP 25% 24% 24% 24% 24% 25% 27% 27%
Savings
Domestic % of GDP 20% 20% 20% 20% 20% 19% 19% 19%
National % of GDP 28% 29% 30% 30% 30% 29% 29% 30%
Ext ernal Sect or
Export % of GDP 17% 20% 18% 17% 16% 20% 21% 20%
Import % of GDP 21% 28% 24% 23% 21% 27% 28% 25%
Remittances % of GDP 8% 9% 10% 11% 11% 10% 11% 11%
13
Macro and Strategy Report

Economic Indicators Fiscal
FY ( Jul- Jun) Unit s 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13( p)
Govt Revenue, Expendit ure, and Financing
Budget Size BDT bn 611 668 936 941 1,105 1,300 1,612 1,893
Budget Size USD bn 9 10 14 14 16 18 20 24
Budget Size % of GDP 14.69% 14.15% 17.15% 15.31% 15.92% 16.32% 17.56% 18.24%
Total Revenue % of GDP 10.79% 10.47% 11.09% 11.25% 11.45% 11.95% 12.51% 13.46%
Tax Revenue % of GDP 8.70% 8.31% 8.80% 9.03% 9.21% 9.92% 10.49% 11.25%
- NBR Tax Revenue % of GDP 8.29% 7.93% 8.42% 8.62% 8.79% 9.49% 10.06% 10.82%
- Non-NBR Tax Revenue % of GDP 0.41% 0.37% 0.37% 0.41% 0.43% 0.43% 0.43% 0.44%
Non-Tax Revenue % of GDP 2.09% 2.16% 2.30% 2.22% 2.24% 2.02% 2.03% 2.20%
Tot al Expendit ure % of GDP 14.69% 14.15% 17.15% 15.31% 15.92% 16.32% 17.56% 18.24%
Revenue Expenditure % of GDP 8.81% 9.61% 10.52% 10.92% 9.90% 9.68% 10.00% 9.91%
Annual Development Program (ADP) % of GDP 5.17% 3.79% 4.12% 3.74% 4.10% 4.50% 4.47% 5.04%
Other Expenditure % of GDP 0.70% 0.74% 2.51% 0.65% 1.92% 2.14% 3.08% 3.28%
Budget Deficit (except grants) % of GDP 3.89% 3.67% 6.06% 4.06% 4.47% 4.37% 5.05% 4.78%
Budget Deficit (including grants) % of GDP 3.30% 3.22% 5.25% 3.26% 3.93% 3.84% 4.56% 4.28%
Financing % of GDP 3.94% 3.53% 4.42% 4.06% 4.47% 4.37% 5.05% 4.27%
Net Foreign Finance % of GDP 1.74% 1.61% 1.84% 1.75% 1.97% 1.26% 1.29% 1.15%
Grants % of GDP 0.88% 0.86% 0.88% 0.80% 0.54% 0.53% 0.49% 0.64%
Loan % of GDP 1.65% 1.52% 1.68% 1.66% 2.09% 1.37% 1.53% -
Repayment % of GDP 0.79% 0.77% 0.73% 0.71% 0.65% 0.65% 0.72% -
Domestic Financing % of GDP 2.20% 1.93% 2.58% 2.31% 2.49% 3.12% 3.75% 3.13%
Bank Loan % of GDP 1.45% 0.94% 2.01% 1.74% 1.25% 2.31% 3.17% 2.75%
Non-bank borrowings % of GDP 0.75% 0.99% 0.58% 0.57% 1.25% 0.81% 0.58% 0.38%
Govt . Debt Out st anding
Government debt outstanding % of GDP 46.90% 46.70% 44.80% 42.70% 41.00% 37.20% 37.10% -
Domestic debt % of GDP 16.40% 16.60% 16.60% 17.20% 17.70% 16.90% 17.70% -
External debt (excluding IMF loan) % of GDP 30.50% 30.10% 28.20% 25.50% 23.30% 20.30% 19.40% -
14
Macro and Strategy Report

Economic Indicators External
FY ( Jul- Jun) Unit s 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13( p)
Ext ernal Sect or & Ot hers
FDI, net inflows USD bn 0.7 0.7 1.0 0.7 0.9 0.8 1.0 -
International Reserves USD bn 3.5 5.1 6.1 7.5 10.8 10.9 10.4 11.7
Exchange Rate (Avg.) BDT/USD 67.2 69.1 68.6 68.8 69.2 71.2 79.2 77.8
Exchange Rate (FY end) BDT/USD 69.7 68.8 68.5 69.1 69.4 74.1 81.8 81.1
BDT Depreciated (Appreciated) % 9.29% 2.83% -0.65% 0.28% 0.55% 2.94% 11.22% -1.84%
Exports USD bn 10.5 12.2 14.1 15.6 16.2 22.9 24.3 27.0
Imports USD bn 14.7 17.2 21.6 22.5 23.7 33.7 35.5 34.0
Trade Balance USD bn (4.2) (5.0) (7.5) (6.9) (7.5) (10.7) (11.2) (6.9)
Current Account USD bn 0.57 0.94 0.70 2.42 3.72 0.89 1.63 2.53
Remittance USD bn 4.8 6.0 7.9 9.7 11.0 11.7 12.8 14.5
Exports % Change 21.62% 15.69% 15.87% 10.30% 4.11% 41.49% 5.93% 11.28%
Imports % Change 12.16% 16.35% 26.07% 4.06% 5.47% 41.79% 5.52% -4.36%
Remittance % Change 24.79% 24.49% 32.40% 22.41% 13.40% 6.03% 10.24% 12.60%
Exports % of GDP 16.80% 20.38% 17.79% 17.44% 16.18% 20.18% 20.67% 20.24%
Imports % of GDP 21.46% 28.47% 24.49% 22.71% 21.31% 27.10% 27.56% 25.44%
Trade Balance % of GDP -4.66% -8.09% -6.70% -5.27% -5.13% -6.92% -6.89% -5.20%
Remittance % of GDP 7.75% 8.74% 9.95% 10.85% 10.95% 10.42% 11.10% 10.83%
M ajor Export s
RMG % of Exports 38.80% 38.25% 36.62% 38.03% 37.11% 36.78% 39.54% -
Knitwear % of Exports 36.26% 37.40% 39.21% 41.30% 40.01% 41.36% 39.06% -
Other % of Exports 24.94% 24.36% 24.17% 20.67% 22.89% 21.87% 21.41% -
RMG & Knitwear % of Exports 75.06% 75.64% 75.83% 79.33% 77.11% 78.13% 78.59% -
M ajor Import s
Crude Petroleum and Petroleum
Products
% of Imports 13.59% 13.02% 12.73% 11.47% 10.77% 12.21% 13.82% -
Raw Cotton and Yarn % of Imports 8.43% 8.39% 8.80% 9.25% 9.09% 12.12% 9.76% -
Capital Machinery % of Imports 9.89% 11.24% 7.69% 6.31% 6.72% 6.91% 5.65% -
Food Grains % of Imports 6.65% 7.40% 11.80% 8.47% 8.49% 9.15% 7.66% -
Fertilizer % of Imports 2.32% 2.08% 2.92% 4.24% 3.02% 3.69% 3.89% -
Clinker % of Imports 1.42% 1.40% 1.60% 1.40% 1.40% 1.33% 1.42% -
Others % of Imports 57.70% 56.46% 54.45% 58.86% 60.51% 54.60% 57.80% -
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Macro and Strategy Report

Economic Indicators Monetary and Market
FY ( Jul- Jun) Unit s 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13( p)
M onet ary & Financial M arket Indicat ors
Inflation (New Base: 2005-2006)
CPI (point to point) YoY' % - - - - - - 5.54% 8.05%
CPI 12 mnth avg, % - - - - - - 8.69% 6.78%
Food inflation YoY - - - - - - 2.56% 8.26%
Food inflation 12 mnth avg, % - - - - - - 7.72% 5.22%
Non-Food Inflation YoY - - - - - - 10.20% 7.75%
Non-Food Inflation 12 mnth avg, % - - - - - - 10.21% 9.17%
Inflation (Old Base: 1995-1996)
CPI (point to point) YoY' % 7.54% 9.20% 10.04% 2.25% 8.70% 10.17% 8.03% 7.97%
CPI 12 mnth avg, % 7.16% 7.20% 9.94% 6.66% 7.31% 8.80% 10.37% 7.70%
Food inflation YoY 8.80% 9.80% 14.10% 0.30% 10.90% 12.51% 7.08% 8.53%
Food inflation 12 mnth avg, % 7.80% 8.10% 12.30% 7.20% 8.50% 11.34% 10.47% 7.35%
Non-Food Inflation YoY 5.70% 8.30% 3.50% 5.90% 5.20% 5.73% 11.72% 6.99%
Non-Food Inflation 12 mnth avg, % 6.40% 5.90% 6.30% 5.90% 5.50% 4.15% 11.15% 8.43%
Foreign Exchange Reserves USD (bn) 3.5 5.1 6.1 7.5 10.8 10.9 10.4 11.7
Call Money Rate (Average) % 11.11% 7.37% 10.24% 4.39% 8.06% 11.16% 14.56% 11.38%
364 -days T-bill Rate (Average) % 0.00% 8.46% 8.47% 8.10% 4.65% 5.56% 9.92% 11.38%
Real interest rate % 4.57% 5.21% 2.14% 4.88% 3.73% 3.33% 3.06% 5.31%
Risk premium on lending (prime rate
minus treasury bill rate)
% 0.00% 4.32% 3.82% 3.77% 6.66% 6.86% 3.83% 2.04%
Lending interest rate % 12.06% 12.78% 12.29% 11.87% 11.31% 12.42% 13.75% 13.42%
Deposit interest rate % 6.68% 6.85% 6.95% 7.01% 6.01% 7.27% 8.15% 8.47%
Interest Rate Spread % 5.38% 5.93% 5.34% 4.86% 5.30% 5.15% 5.60% 4.95%
Broad money % of GDP 43.46% 44.77% 45.58% 48.23% 52.29% 55.29% 56.32% 58.14%
Broad money, M2 % Change 19.30% 17.06% 17.63% 19.17% 22.44% 21.34% 17.39% 16.71%
Broad money, M2 BDT bn 1,806.7 2,115.0 2,487.9 2,965.0 3,630.3 4,405.2 5,171.1 6,035.1
Broad money, M2 USD bn 26.9 30.6 36.3 43.1 52.5 61.9 65.3 77.6
Capit al M arket ( DSE)
DGEN (DSE General Index) Actual 1,340 2,149 3,001 3,010 6,154 6,117 4,573 4,386
% Change in DGEN % -21.81% 60.45% 39.60% 0.33% 104.42% -0.59% -25.25% -4.09%
Issued Capital BDT bn 64.55 83.59 108.84 147.04 217.45 301.05 384.11 -
Issued Capital USD bn 0.96 1.21 1.59 2.14 3.14 4.23 4.85 -
Issued Capital % of GDP 1.55% 1.77% 1.99% 2.39% 3.13% 3.78% 4.18% -
Market Capitalization (Equity) BDT bn 203.50 411.55 788.82 1,001.43 2,276.41 2,327.02 1,932.44 1,933.14
Market Capitalization (Equity) USD bn 3.03 5.96 11.50 14.56 32.90 32.68 24.40 24.86
Market Capitalization (Equity) % of GDP 4.90% 8.71% 14.45% 16.29% 32.79% 29.21% 21.05% 18.62%
Turnover BDT bn 45.99 164.67 543.24 893.79 2,563.54 3,258.80 1,171.45 857.09
Turnover USD bn 0.68 2.38 7.92 12.99 37.05 45.76 14.79 11.02
Total Number of Companies (Equity) Actual 269 273 286 300 273 267 279 255
16
Macro and Strategy Report

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