IMF cuts growth forecast to 6.5pc
The International Monetary Fund yesterday cut the economic growth forecast for Bangladesh to 6.5 per cent for the current fiscal year from its April projection of 7.5 per cent.
It came as the IMF said the outlook for the low-income developing countries has darkened considerably due to worsening coronavirus pandemic dynamics.
The Washington-based multilateral lender came up with the projection in its latest World Economic Outlook (WEO) report. The projection is lower than the government's target of 7.2 per cent for FY22.
The report also projected that Bangladesh's gross domestic product (GDP) might have expanded by 4.6 per cent in the last fiscal year, down from 5 per cent it previously estimated.
The government's provisional GDP growth figure for FY21 is 5.47 per cent. The economic growth is expected to jump to 7.1 per cent in FY26, according to the IMF.
The estimate is in line with the projection made by the World Bank, which said last week that the GDP would grow by 6.4 per cent this fiscal year.
The IMF trimmed the projection of the global growth to 5.9 per cent for this year in contrast to its previous estimation of 6 per cent. It, however, kept unchanged the global growth at 4.9 per cent for the next year.
"The global recovery continues, but the momentum has weakened, hobbled by the pandemic," the report said.
In South Asia, India's growth forecasts were kept unchanged at 9.5 per cent for 2021 and 8.5 per cent for 2022.
Nepal is expected to grow by 1.8 per cent in 2021 and 4.4 per cent in 2022, while the Maldives will grow at a staggering pace of 18.9 per cent this year and 13.2 per cent next year.
Sri Lankan economy is projected to expand by 3.6 per cent this fiscal year and 3.3 per cent next fiscal year. Pakistan will have a GDP growth rate of 3.9 per cent in FY21 and 4 per cent in FY22.
The IMF said Bhutan's economy would contract by 1.9 per cent in 2021 before returning to the growth of 4.2 per cent in the next year.
According to the lender, pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries.
"Overall, risks to economic prospects have increased, and policy trade-offs have become more complex."
Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices.
If higher inflation becomes entrenched, it could force central banks to respond aggressively, and higher interest rates would slow the recovery, the IMF cautioned.
"Central banks should be prepared to act quickly if the risks of rising inflation expectations become more material in this uncharted recovery," said IMF Chief Economist Gita Gopinath.