Dhaka: The Unnayan Onneshan (UO) revealed that medium-term macroeconomic challenges in the forms of stagnation in ratio of private investment to gross domestic product, deceleration in rate of growth in collection of revenue and lower inflow of remittance, coupled with high youth unemployment loom large.

The independent multidisciplinary think tank in its year-end assessment of the economy said, "The causes of elapsing prospects are more institutional. The gradual corrosion of institutions has constrained allocation of resources to channel efficiently into the productive sectors in order for the economy to get higher returns in terms of expanded productive capacity."

The Unnayan Onneshan noted that the stagnation in the ratio of private investment to Gross Domestic Product (GDP) and ever increasing rise of capital flight, coupled with regulatory unpredictability in economic management have appeared to be the major challenges in the economy.

The think tank showed that private investment as percentage of GDP decreased by 0.04 percent on average since FY 2008-09. Private investment stood 21.87, 21.56, 22.14, 22.50, 21.75, 22.03, 22.07, and 21.78 percent of GDP in FY 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, and 2015-16 respectively.

The think tank showed that the collection of total tax revenue as percentage of GDP has been declining since FY 2012-13. Total tax revenue as percentage of GDP stood at 9.74 percent, 9.69 percent, 9.28 percent, and 8.98 percent in FY 2012-13, FY 2013-14, FY 2014-15, and FY 2015-16 respectively.

Declining trend is also observed in the inflow of workers' remittance in the first five months of FY 2016-17 compared to the corresponding period of the previous fiscal year. Inflow of workers' remittance declined by 15.65 percent to 5208.12 million USD in July-November 2016 from 6174.59 million USD in July-November 2015.

In view of the present economic challenges, the research organization urges adoption of a medium-term strategy, encompassing employment enhancement actions, higher revenue collection through expanding the tax base, institutional reform in financial sector, increased private investment through recovering business confidence, effective harmonization of macroeconomic policies, and development of a functional social security system.