ADB lowers growth forecast
The Asian Development Bank has trimmed its economic growth projection for Bangladesh to 6.8 per cent for 2021-22, a reflection of the impacts of the containment measures reinstated at the start of the fiscal year to bring down coronavirus infection rates.
The Manila-based lender revised the growth projection in its latest Asian Development Outlook 2021 Update.
In April, it forecast a 7.2 per cent gross domestic product (GDP) growth. The government has also set a similar target for 2021-22, up from a 5.47 per cent provisional estimate in the last fiscal year.
The government's policies for saving lives while protecting livelihoods underpinned the recovery process in Bangladesh.
The World Bank has projected that Bangladesh's GDP growth would be 5.1 per cent in FY22.
The growth projection reflects a strong recovery supported by strengthening manufacturing, continued expansion in the global economy, and effective government recovery policies, said the ADB in the report.
With continued robust growth expected in major country destinations, export earnings should reach pre-pandemic levels, it said.
"The government's policies for saving lives while protecting livelihoods underpinned the recovery process in Bangladesh, making it one of the few countries in the world sustaining commendable economic growth in recent difficult times," said Manmohan Parkash, country director of the ADB, in a press release.
The projected GDP of Bangladesh is the third-highest in South Asia. The Maldives is forecast to attain an economic growth of 15 per cent and India 7.5 per cent.
Nepal may post a GDP growth of 4.1 per cent, Pakistan 4 per cent, and Sri Lanka 3.4 per cent.
In Bangladesh, remittances are expected to remain strong, firming up private consumption. Improving consumer confidence and government stimulus measures will help boost private and public investment.
The main downside risk to the forecast would be sustained escalation of infection rates in major advanced economies, clipping external demand.
"Prudent macroeconomic management and efficient implementation of stimulus measures and social protection programmes have helped. Continued efforts for job creation, quick vaccination, and improving domestic resource mobilisation will further accelerate the recovery process," Parkash said.
He applauded recent initiatives in the areas of financial inclusion and expansion of social protection.
Sustained reforms to increase business competitiveness, foreign investment, diversify exports, develop skills, and adopt technology will stimulate private sector investments and hasten economic recovery, he said.
In FY22, improving consumer confidence and the government's fiscal and monetary stimulus measures are expected to boost private and public investment.
The central bank's expansionary and accommodative monetary policy is expected to support the projected growth while keeping inflation contained.
Inflation could edge up to 5.8 per cent, and the current account deficit to narrow to 0.6 per cent of GDP in FY22.
Continued implementation of the increased fiscal and monetary stimulus measures could create inflationary pressures, the ADB said.
"A good crop outlook, consumer caution and underutilised production capacity should mitigate any upward pressure on prices. Domestic administered prices for fuel may cushion the impact of increased crude oil prices."
On the supply side, agriculture growth is projected to go up to 3.7 per cent in FY2022, driven by the budget priority extended to the sector.
Exports may grow by 8 per cent on continued robust growth projected in major export destinations.
According to the report, growth in remittances is likely to moderate to 7 per cent in FY2022.
"Providing vaccinations for workers is key to job placement in destination countries and maintaining robust remittance growth."