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ADB cuts Bangladesh's GDP growth forecast to 6.6%, revises up inflation
21 September, 2022, 11:35 am
Last modified: 21 September, 2022, 04:53 pm
April 2022 forecast
September 2022 forecast
12.0%
10.4%
8.0%
7.2%
7.1%
6.6%
5.0%
4.7%
7.5%
4.0%
4.5%
3.5%
2.5%
−3.3%
Maldives
India
Bangladesh
Nepal
Bhutan
Pakistan
Sri Lanka
The year 2023 represents fiscal years of respective countries
Chart: The Business Standard Source: ADB Created with Datawrapper
The Asian Development Bank (ADB) has trimmed its growth forecast for Bangladesh's gross domestic product (GDP) to 6.6% for the current fiscal year of 2022-23 from a 7.1% projection made in April this year.
In its September update report of the Asian Development Outlook (ADO) 2022, released on Wednesday (21 September), the Manila-based lender said, Bangladesh's growth momentum continued in 2022, but it will slow in 2023 as lower consumption expenditure on weaker export demand and income, an uncertain outlook, and domestic production constraints.
The moderately lower growth forecast reflects slower domestic demand and weaker export prospects due to slower growth in advanced economies, ADB said; adding that inflation is projected to rise from 6.2% in FY2022 to 6.7% in FY2023. The current account deficit is expected to narrow from 4.1% of GDP in FY2022 to 3.6% of GDP in FY2023 as imports slacken and remittances increase.
The main risk to this growth projection is a slowdown in exports caused by global uncertainty over the prolonged war in Ukraine, it added.
In April of this year, the ADB projected 7.1% growth for Bangladesh in the current year.
"The government is navigating the prolonged external economic uncertainties relatively well and has implemented appropriate policies to reduce the external imbalance, said Country Director Edimon Ginting.
"But turbulent times like these are also a good time to accelerate reforms that would improve the country's growth prospects in the medium term. These reforms include improving domestic resource mobilisation, deepening the financial market, and enhancing competitiveness to promote the creation of productive jobs in the private sector," Ginting added.
"Uncertainties in the international energy market provide a good momentum to accelerate reforms to achieve the country's climate change goals and expand domestic renewable energy supply to reduce dependence on fossil fuels," he further said.
"The GDP growth of Bangladesh is estimated to be 7.2% in the fiscal year 2022, up slightly from 6.9% in the fiscal year 2021. A broad-based recovery in economic activities fueled this growth with rapidly rising external and domestic demand. Exports grew sharply on strong pent-up demand from major export destinations. Private and public consumption was a major contributor to growth in FY2022 with a robust level of workers' remittances," the ADB country director said.
He said that Bangladesh's private sector credit showed solid growth, increasing 13.7% from a year earlier by June 2022, fueling private investment.
"Public investment was robust with continuing implementation of large infrastructure projects. Monetary policies pursued by Bangladesh Bank were expansionary, which also played a key role in the continued strength of the economy," he said.
Higher global oil, gas, and commodity prices resulted in an increase in inflation to 6.2% in the fiscal year 2022 from 5.6% a year earlier. The fiscal deficit widened to 5.1% of GDP, slightly above the customary target, driven by higher spending for subsidies and current social protection cash transfers and lower than targeted revenue collection. The current account deficit widened to 4.1% of GDP in FY2022 mainly due to higher trade deficit and lower remittances, the ADB said.
The ADO 2022 Update stated that private investment growth will be lower due to global uncertainty and energy shortages. With slower revenue growth and higher import costs, public investment growth will also be slower as a result of government austerity measures.
Inflation is expected to accelerate from 6.2% in FY2022 to 6.7% in FY2023 as price pressures increase due to the upward adjustment of domestic administered prices for all types of fuel and rising global commodity prices.
ADB has already provided $2.5 billion in loans and $7.23 million in grants to Bangladesh to address the socioeconomic impacts of the coronavirus disease (Covid-19) pandemic and support a rapid recovery.
For the period 2023-2025, ADB has programmed about $9.5 billion for Bangladesh.
In its 49-year partnership with Bangladesh, ADB has mobilised about $40 billion in loans.
www.tbsnews.net
ECONOMY
TBS Report21 September, 2022, 11:35 am
Last modified: 21 September, 2022, 04:53 pm
ADB slashes growth forecast for 2023
Real GDP growth rate forecast for South Asian economiesApril 2022 forecast
September 2022 forecast
12.0%
10.4%
8.0%
7.2%
7.1%
6.6%
5.0%
4.7%
7.5%
4.0%
4.5%
3.5%
2.5%
−3.3%
Maldives
India
Bangladesh
Nepal
Bhutan
Pakistan
Sri Lanka
The year 2023 represents fiscal years of respective countries
Chart: The Business Standard Source: ADB Created with Datawrapper
The Asian Development Bank (ADB) has trimmed its growth forecast for Bangladesh's gross domestic product (GDP) to 6.6% for the current fiscal year of 2022-23 from a 7.1% projection made in April this year.
In its September update report of the Asian Development Outlook (ADO) 2022, released on Wednesday (21 September), the Manila-based lender said, Bangladesh's growth momentum continued in 2022, but it will slow in 2023 as lower consumption expenditure on weaker export demand and income, an uncertain outlook, and domestic production constraints.
The moderately lower growth forecast reflects slower domestic demand and weaker export prospects due to slower growth in advanced economies, ADB said; adding that inflation is projected to rise from 6.2% in FY2022 to 6.7% in FY2023. The current account deficit is expected to narrow from 4.1% of GDP in FY2022 to 3.6% of GDP in FY2023 as imports slacken and remittances increase.
The main risk to this growth projection is a slowdown in exports caused by global uncertainty over the prolonged war in Ukraine, it added.
In April of this year, the ADB projected 7.1% growth for Bangladesh in the current year.
"The government is navigating the prolonged external economic uncertainties relatively well and has implemented appropriate policies to reduce the external imbalance, said Country Director Edimon Ginting.
"But turbulent times like these are also a good time to accelerate reforms that would improve the country's growth prospects in the medium term. These reforms include improving domestic resource mobilisation, deepening the financial market, and enhancing competitiveness to promote the creation of productive jobs in the private sector," Ginting added.
"Uncertainties in the international energy market provide a good momentum to accelerate reforms to achieve the country's climate change goals and expand domestic renewable energy supply to reduce dependence on fossil fuels," he further said.
"The GDP growth of Bangladesh is estimated to be 7.2% in the fiscal year 2022, up slightly from 6.9% in the fiscal year 2021. A broad-based recovery in economic activities fueled this growth with rapidly rising external and domestic demand. Exports grew sharply on strong pent-up demand from major export destinations. Private and public consumption was a major contributor to growth in FY2022 with a robust level of workers' remittances," the ADB country director said.
He said that Bangladesh's private sector credit showed solid growth, increasing 13.7% from a year earlier by June 2022, fueling private investment.
"Public investment was robust with continuing implementation of large infrastructure projects. Monetary policies pursued by Bangladesh Bank were expansionary, which also played a key role in the continued strength of the economy," he said.
Higher global oil, gas, and commodity prices resulted in an increase in inflation to 6.2% in the fiscal year 2022 from 5.6% a year earlier. The fiscal deficit widened to 5.1% of GDP, slightly above the customary target, driven by higher spending for subsidies and current social protection cash transfers and lower than targeted revenue collection. The current account deficit widened to 4.1% of GDP in FY2022 mainly due to higher trade deficit and lower remittances, the ADB said.
The ADO 2022 Update stated that private investment growth will be lower due to global uncertainty and energy shortages. With slower revenue growth and higher import costs, public investment growth will also be slower as a result of government austerity measures.
Inflation is expected to accelerate from 6.2% in FY2022 to 6.7% in FY2023 as price pressures increase due to the upward adjustment of domestic administered prices for all types of fuel and rising global commodity prices.
ADB has already provided $2.5 billion in loans and $7.23 million in grants to Bangladesh to address the socioeconomic impacts of the coronavirus disease (Covid-19) pandemic and support a rapid recovery.
For the period 2023-2025, ADB has programmed about $9.5 billion for Bangladesh.
In its 49-year partnership with Bangladesh, ADB has mobilised about $40 billion in loans.
ADB cuts Bangladesh's GDP growth forecast to 6.6%, revises up inflation
The Asian Development Bank (ADB) has trimmed its growth forecast for Bangladesh's gross domestic product (GDP) to 6.6% for the current fiscal year of 2022-23 from a 7.1% projection made in April this year. In its September update report of the Asian Development Outlook (ADO) 2022, released on...
