IMF lifts GDP growth forecast to 5pc
The International Monetary Fund has raised its projection for the economic growth of Bangladesh to 5 per cent for 2021, up from 4.4 per cent it forecast in October.
The Washington-based multilateral lender came up with the projection in its World Economic Outlook, which was published yesterday.
According to the IMF, the country will return to its high growth trajectory next year, when the gross domestic product (GDP) is projected to expand by 7.5 per cent.
The GDP will grow by 7.2 per cent in 2026.
Experts, however, say higher GDP growth is still uncertain since the country is currently experiencing a fresh surge of coronavirus infections, which have forced the government to impose strict containment measures from Monday, restricting mass mobility and shutting down businesses.
Zahid Hussain, a former lead economist of the World Bank's Dhaka office, said the IMF had upgraded its global projections mainly due to the progress in vaccination programmes across the world.
"But they could not anticipate the latest surge in coronavirus infections because all the figures are finalised a month before the report is published," he said.
The IMF's projection had been very plausible if there were no pickup in coronavirus caseloads and disruptions as external demand was expected to pick up in the second half of 2021, the economist said.
"The problem is Bangladesh is now in lockdown, and there is a surge in infections. So, uncertainty has deepened," he said.
In Bangladesh, domestic demand, especially private consumption expenditure is the bigger component of the economy compared to the external demand,
"We were experiencing a recovery in the private consumption expenditure as people started purchasing. This will now face a setback again," Hussain said.
On March 31, the World Bank projected Bangladesh's GDP to grow as high as 5.6 per cent in the fiscal year 2020-21, subject to three factors.
The projected expansion will depend on how the ongoing vaccination campaign proceeds, whether new restrictions to mobility are required, and how quickly the world economy recovers, the WB said in its "South Asia Economic Focus Spring 2021 South Asia Vaccinates'' report.
A gradual recovery is expected to continue in Bangladesh, particularly if the government's Covid-19 recovery programmes are implemented swiftly.
According to the IMF's projection, India's GDP would grow by 12.5 per cent in 2021, Sri Lanka by 4 per cent, Nepal by 2.9 per cent, and Pakistan by 1.5 per cent.
Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis was increasingly visible, the lender said.
"Thanks to the ingenuity of the scientific community, we have multiple vaccines that can reduce the severity and frequency of infections. In parallel, adaptation to pandemic life has enabled the global economy to do well despite subdued overall mobility, leading to a stronger-than-anticipated rebound, on average, across regions."
The lender has projected a stronger recovery in 2021 and 2022 for the global economy compared to its previous forecast, with growth projected to be 6 per cent in 2021 and 4.4 per cent in 2022.
Nonetheless, the outlook presents daunting challenges related to divergences in the speed of recovery, both across and within countries and the potential for persistent economic damage from the crisis.