Bangladesh’s GDP to grow at 5.8pc this fiscal year: ADB

The Asian Development Bank (ADB) has forecasted that Bangladesh gross domestic product (GDP) would grow at highest 5.8 per cent this fiscal year.

"The economy was showing signs of recovery with higher remittances, exports and other indicators. But the recent surge in pandemic and the lockdowns are likely to trim our GDP growth projection of 6.8 per cent for fiscal year 2020-2021 by at least one percentage point," said ADB Country Director Manmohan Parkash.

The 6.8 per cent growth forecast was made before the start of the second wave in March this year, Parkash said.

Now, ADB thinks the growth rate may hover between 5.5 per cent and 5.8 per cent due to the economic fallouts of the second wave of the pathogen, he said.

He spoke while addressing a virtual conference today.

Despite headwinds from the epidemic, Bangladesh's GDP growth is forecast higher in FY2021-22 in line with a projected global economic rebound, according to the latest ADB report Asian Development Outlook (ADO) 2021 released today.

In a statement, Parkash said Bangladesh government managed the first wave of Covid-19 last year well as the stimulus measures and economic policies have largely been effective.

"The ongoing pandemic is an opportunity to undertake further reforms in social protection and health sector, improving competitiveness of the private sector, reducing cost of doing business, diversifying exports, and developing skills." Expanding social safety nets, enhancing investments, creating employment, ensuring mass vaccination, and improving the health sector are critical actions for achieving the Eighth Five Year Plan goals, he added.

"Future economic growth will depend on recovery in domestic economic activities fuelled mainly by implementation of stimulus packages, strong inflow of remittances, and rebound in global trade amid projected growth in major export destinations," according to the ADO report.

"Current account balance is expected to cross into surplus of 0.7 per cent of GDP in FY2021, contributed by remittance growth. The main risk to this growth projection is further surge of Covid-19 cases and delayed availability and supply of vaccines both globally and domestically," it reads.

It also said that continued strong remittance inflow is likely to support domestic demand with growth in private consumption.

Remittances from workers overseas increased by 35.1 per cent in the first 9 months of FY2021 due to the 2 per cent cash incentive offered by the government and reduced documentation requirements.

Private investment is expected to pick up as moderate growth in private sector credit improves confidence. Higher public investment is forecasted as the government expands capital spending.

However, the ADO report also forecasted that the inflation is expected to reach 5.8 per cent in FY2021 from 5.7 per cent last fiscal as price pressures are increasing from higher public expenditures to implement stimulus measures and a rise in global food and fuel prices due to pick up in global economic activity.