WB keeps Bangladesh’s GDP growth forecast unchanged at 5.2% for FY23

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WB keeps Bangladesh’s GDP growth forecast unchanged at 5.2% for FY23​

Rejaul Karim Byron
Tue Apr 4, 2023 11:24 AM Last update on: Tue Apr 4, 2023 11:41 AM

The World Bank today said Bangladesh's GDP would grow by 5.2 per cent in the current financial year, unchanged from its January forecast, as elevated inflation, tighter financial conditions, disruptive import restrictions, and global economic uncertainty keep hurting the economy.

In June last year, the WB projected that the gross domestic product (GDP) of Bangladesh would expand by 6.7 per cent in 2022-23.

​

But as higher inflation persisted, energy shortage at home and abroad intensified and the war in Ukraine dragged on, the multilateral lender in October slashed the economic growth projection to 6.1 per cent. The growth forecast was slashed further to 5.2 per cent in January.

"GDP growth is expected to decelerate in FY23 to 5.2 per cent before returning to its long-term trend," said the WB's Bangladesh Development Update released by its Country Director to Bangladesh and Bhutan Abdoulaye Seck from Dhaka office this morning.

In December, the government revised down the growth forecast from 7.2 per cent to 6.5 per cent due to the impacts of the Ukraine war.

Bangladesh's GDP expanded by 6.9 per cent in 2020-21 and 7.1 per cent in 2021-22.

"Growth is expected to accelerate in FY24 and converge to around 6.5 per cent over the medium term, as inflationary pressure eases, external conditions improve, and reform implementation gains momentum," said the WB.

It said inflation is projected to remain above the Bangladesh Bank's 5.5 per cent target in the near and medium term. External and fiscal sustainability will be stressed by elevated global commodity prices, with the pace of recovery contingent on policy reform implementation.

"The fiscal deficit is expected to widen in FY23 as subsidy expenditures rise, moderating over the medium term. Downside risks include slowing demand in Bangladesh's major export markets and unresolved financial sector vulnerabilities."

A gradual reduction in extreme poverty is expected, from an estimated 10 per cent in 2023 to 9.5 per cent in 2024, using the international poverty line of US$2.15 in 2017 purchasing power parity.

The report said structural reforms are needed to support a faster pace of growth over the medium term.

"To achieve the vision of attaining upper middle-income status by 2031, Bangladesh needs to create jobs and employment opportunities by creating a competitive business environment, diversifying exports, increasing human capital, building efficient infrastructure, deepening the financial sector, and establishing an enabling policy environment that attracts private investment."

"At the same time, Bangladesh will need to implement coordinated policies and investments to address rising climate vulnerabilities."

WB keeps Bangladesh’s GDP growth forecast unchanged at 5.2% for FY23

The World Bank today said Bangladesh’s GDP would grow by 5.2 per cent in the current financial year, unchanged from its January forecast, as elevated inflation, tighter financial conditions, disruptive import restrictions, and global economic uncertainty keep hurting the economy.

www.thedailystar.net

 

[mb444]

WB keeps Bangladesh’s GDP growth forecast unchanged at 5.2% for FY23​

Rejaul Karim Byron
Tue Apr 4, 2023 11:24 AM Last update on: Tue Apr 4, 2023 11:41 AM

The World Bank today said Bangladesh's GDP would grow by 5.2 per cent in the current financial year, unchanged from its January forecast, as elevated inflation, tighter financial conditions, disruptive import restrictions, and global economic uncertainty keep hurting the economy.

In June last year, the WB projected that the gross domestic product (GDP) of Bangladesh would expand by 6.7 per cent in 2022-23.

​

But as higher inflation persisted, energy shortage at home and abroad intensified and the war in Ukraine dragged on, the multilateral lender in October slashed the economic growth projection to 6.1 per cent. The growth forecast was slashed further to 5.2 per cent in January.

"GDP growth is expected to decelerate in FY23 to 5.2 per cent before returning to its long-term trend," said the WB's Bangladesh Development Update released by its Country Director to Bangladesh and Bhutan Abdoulaye Seck from Dhaka office this morning.

In December, the government revised down the growth forecast from 7.2 per cent to 6.5 per cent due to the impacts of the Ukraine war.

Bangladesh's GDP expanded by 6.9 per cent in 2020-21 and 7.1 per cent in 2021-22.

"Growth is expected to accelerate in FY24 and converge to around 6.5 per cent over the medium term, as inflationary pressure eases, external conditions improve, and reform implementation gains momentum," said the WB.

It said inflation is projected to remain above the Bangladesh Bank's 5.5 per cent target in the near and medium term. External and fiscal sustainability will be stressed by elevated global commodity prices, with the pace of recovery contingent on policy reform implementation.

"The fiscal deficit is expected to widen in FY23 as subsidy expenditures rise, moderating over the medium term. Downside risks include slowing demand in Bangladesh's major export markets and unresolved financial sector vulnerabilities."

A gradual reduction in extreme poverty is expected, from an estimated 10 per cent in 2023 to 9.5 per cent in 2024, using the international poverty line of US$2.15 in 2017 purchasing power parity.

The report said structural reforms are needed to support a faster pace of growth over the medium term.

"To achieve the vision of attaining upper middle-income status by 2031, Bangladesh needs to create jobs and employment opportunities by creating a competitive business environment, diversifying exports, increasing human capital, building efficient infrastructure, deepening the financial sector, and establishing an enabling policy environment that attracts private investment."

"At the same time, Bangladesh will need to implement coordinated policies and investments to address rising climate vulnerabilities."

WB keeps Bangladesh’s GDP growth forecast unchanged at 5.2% for FY23

The World Bank today said Bangladesh’s GDP would grow by 5.2 per cent in the current financial year, unchanged from its January forecast, as elevated inflation, tighter financial conditions, disruptive import restrictions, and global economic uncertainty keep hurting the economy.

www.thedailystar.net

I hope we do achieve the target. One one side the USD crunch has meant inputs and machinery inputs particularly for exports are down. However the same USD crunch means lots of export substitution is going on incountry in things such as cosmetics and luxury goods. Global recession in some of our key markets has impacted us and we will see the lower numbers coming through in 3 to 6 months.

We do however have had a bumper harvest and in petrodollar economies our manpower export is up with monthly remittances again hitting above $2b a month. With the two eids coming up we should see these rise dramatically.

Lets see how the pluses and minuses work themselves out.... fingers crossed.