IMF raises growth forecast
After the World Bank and the ADB, the IMF has now upgraded this fiscal year's outlook for Bangladesh's economic growth to 6.8 percent from 6.5 percent as forecasted in April.
The International Monetary Fund's latest forecast, which came in the World Economic Outlook publication released yesterday, is closer to the government target of 7 percent.
Previously, the IMF forecasts were about 1 percentage point lower than the government target, and were more conservative than the WB and Asian Development Bank estimates. But this time the scenario is reverse.
“This is reassuring as it is not quite far from our estimate. We forecasted 7 percent-plus growth this fiscal year, which I feel is achievable,” said Bangladesh Bank Governor Atiur Rahman.
“Normally IMF's estimate is more conservative and remains far below our estimate. This time they are much closer to our estimate,” Rahman told The Daily Star by phone from Lima. Rahman is in the Peruvian capital for the annual meetings of the WB-IMF.
Earlier this week, the WB upgraded its growth forecast for the Bangladesh economy to 6.5 percent from its April prediction of 6.2 percent.
The ADB tipped the country's gross domestic product, which is the monetary value of all the finished goods and services produced within a country's border in a specific time period, to grow at 6.7 percent this year, up from its March prediction of 6.4 percent.
The multilateral lenders' optimism is reflective of the vibrancy of the Bangladesh economy, according to Rahman.
All the macroeconomic indicators point to a more vibrant and resilient economy, when most of the economies around are tumbling with vulnerabilities and instabilities.
“We will do even better even if we can maintain current level of political stability and certainty,” Rahman said.
“Let's remain aspirational and optimistic, as we have been able to lay a strong base of macroeconomic fundamentals.”
There are miles to go on the infrastructural front, he said.
“And here too we are ready with funding sources. Let's just focus on our implementation capacity. Let's take both public and private implementors on board to achieve our aspirations.”
However, the WB in a recent report said achieving the 7 percent GDP growth target outlined in the budget for fiscal 2015-16 while reducing inflation to 6.2 percent will be challenging.
“All evidence suggests Bangladesh's potential GDP growth rate is no more than 6.5 percent given its demographics, feeble state of physical infrastructure and lingering political uncertainties.”
Meanwhile, in the meeting of the Executive Committee of the National Economic Council yesterday, Prime Minister Sheikh Hasina said the country will finally break the 6 percent growth trap this year, said a planning ministry official.
The multilateral lenders used to forecast 3-4 percent growth for the Bangladesh economy before and now they are forecasting above 6 percent.
This shows that the economy has expanded much and this year, will grow by 7 percent-mark, said the official quoting the prime minister.
The IMF forecast that the GDP would grow 6.5 percent in fiscal 2014-15, which is in line with the Bangladesh Bureau of Statistics' preliminary estimate.