WB revises down growth forecast for Bangladesh

Taking into account the Ukraine war, the World Bank reduced Bangladesh's economic growth projection to 6.7 percent for the next fiscal year from its January forecast of 6.9 percent.

The economy of the country will grow at its previous projected rate at 6.4 percent at the end of the current fiscal 2021-22, according to the Global Economic Prospects report released by the WB yesterday.

However, the Bangladesh government in April projected that the country's economy will grow at 7.5 percent in the next fiscal year and at the end of the current fiscal year the economy will grow at 7.2 percent.

The WB report said, "Energy subsidies as a share of government expenditure are the highest in Bangladesh, the Maldives, and Pakistan.

"With already high energy costs and the uncertain outlook, the region could face additional pressure on inflation -- despite the dampening effect of subsidies -- and larger current account deficits.

"This pressure could undermine growth, increase poverty, and divert budgetary resources away from productivity-enhancing investment and social protection."

Rising energy prices, given the region's high dependency on energy imports and elevated energy subsidies in some economies, could further undermine growth and threaten a widening of fiscal imbalances, reads the report.

Stronger-than-expected rebound from the pandemic helped Bangladesh boost activity through early 2022.

In Bangladesh, goods exports have grown by over 25 percent so far this fiscal year.

But the war in Ukraine has dampened activity, as rising food and energy prices have stunted purchasing power, and increased uncertainty.

Some authorities have implemented policies to cushion the impact of high inflation, the WB said.

In the forecast, the WB reduced the economic growth at 1.2 percentage point to 7.50 percent for the current fiscal year.

The Indian economy will grow at 0.3 percentage point to reach 7.1 percent in the next fiscal year, the WB said.