Bangladesh is projected to be among the fastest growing least developed countries in 2018 with the expected GDP growth of 7.1 percent, supported by vigorous domestic demand, according to a new report of the United Nations.
The UN's World Economic Situation and Prospects 2018 Report launched yesterday said: “The Bangladesh economy is set to continue expanding at a rapid pace, underpinned by strong domestic demand, especially large infrastructure projects and new initiatives in the energy sector.”
In Bangladesh, the growth of gross domestic product is expected to remain above 7.1 percent in 2018 and 7.2 percent in 2019, according to the UN's flagship publication on expected trends in the global economy.
Bhutan, one of the four LDCs from South Asia, is also expected to grow by 7.1 percent in 2018 by taking benefits from infrastructure investments.
The UN report said growth in the LDCs is expected to rise modestly from an estimated 4.8 percent in 2017 to 5.4 percent in 2018 and 5.5 percent in the next year.
The acceleration is due mostly to more favourable external economic conditions and, in particular, firming commodity prices, which support trade, financial flows and investment in natural resource projects and infrastructure, the report said.
Despite having better prospects, the LDCs as a group will not be able to achieve the Sustainable Development Goal target of 8.1 percent this year, which calls for “at least 7 percent GDP growth per annum”.
Nonetheless, some countries in the group will achieve average growth above or close to 7 percent in 2018–19 and the majority will grow at 5 percent or higher by the end of 2019, the report said.
In 2017, inflation declined to record lows in India and Nepal, while it remained relatively muted in comparison to historical figures in Pakistan, Bangladesh and Iran.
Inflation is expected to be 5.4 percent in 2018 and 5.5 percent in 2019 in Bangladesh. According to the report, fiscal deficit continues to be moderately high in Bangladesh, at about 5 percent of GDP.
The report also said East and South Asia will remain the world's most dynamic and fastest-growing regions, supported by robust domestic demand and accommodative fiscal measures.
In 2017, regional GDP expanded by 6 percent, outpacing the rest of the world. The economy is projected to remain relatively steady at 5.8 percent in 2018 and 5.9 percent in 2019.
In South Asia, the economic outlook remains steady and favourable, driven by robust private consumption and sound macroeconomic policies.
“The positive outlook will contribute to further gradual progress in labour market indicators and a reduction in poverty rates. Monetary policy stances are moderately accommodative, while fiscal policies maintain a strong emphasis on infrastructure investment.”
Despite the improved short-term outlook, the global economy continues to face risks, including changes in trade policy, a sudden deterioration in global financial conditions and rising geopolitical tensions.
The world economy also faces longer-term challenges.
The report highlighted four areas where the improved macroeconomic situation opens the way for policy to address these challenges: increasing economic diversification, reducing inequality, supporting long-term investment and tackling institutional deficiencies.
The report noted that reorienting policy to address these challenges can generate stronger investment and productivity, higher job creation and more sustainable medium-term economic growth.
“In South Asia, the reform agenda might experience some setbacks, while political instabilities could dampen investment prospects.”
The current macroeconomic environment in the region is conducive for policymakers to address longer-term issues and achieve greater progress on structural reforms, the report said.