UN cuts Bangladesh’s growth forecast

The United Nations (UN) has trimmed its forecast on Bangladesh's economic growth to 6 per cent for 2023 from its previous projection of 6.4 per cent as the country's economic situation has significantly deteriorated due to high food and energy prices, monetary tightening and fiscal vulnerabilities.

The UN also projected deceleration of global economic growth from an estimated 3 per cent in 2022 to only 1.9 per cent this year, marking one of the lowest growth rates in recent decades.

In case of South Asia, the average gross domestic product (GDP) growth is projected to moderate to 4.8 per cent in 2023 from 5.6 per cent in 2022, said the UN in its World Economic Situation and Prospects 2023 released on Wednesday.

The outlook for South Asia has deteriorated and is subject to multiple downside risks amid global monetary tightening, fiscal vulnerabilities, rising inflation and extreme weather events, the UN said.

"Rising global food and energy prices are intensifying pressure on food security and undermining progress in the Sustainable Development Goals, it said, "The economic impact of the conflict in Ukraine is exacerbating existing vulnerabilities across the region."

The UN had predicted 6.4 per cent growth for Bangladesh economy in its 2022 report. In October last year, the International Monetary Fund forecasted 6 per cent growth for Bangladesh for fiscal year 2022-23 and the UN's latest projection on Bangladesh's growth is in line with IMF forecast.

Citing food insecurity in the region, the UN said the number of people facing acute food insecurity rose in 2022, particularly in Afghanistan, Bangladesh, Pakistan and Sri Lanka.

It said fiscal balances in Bangladesh and Nepal have remained roughly unchanged and the tax-GDP ratio in Bangladesh is below 9 per cent.

"This suggests opportunities for increasing fiscal revenues through tax reform and rate increases, although it usually takes years to implement meaningful tax reforms and increase the tax base of a country. On the expenditure side, there is scope to reprioritise expenditures based on how much they loosen short-term constraints and support long-term sustainable development."