Dhaka, Sept 22: The Asian Development Bank (ADB) has revised Bangladesh’s growth forecast for the current fiscal amid fears of a third wave of the Covid pandemic.
In its latest report, the regional lender has pegged Bangladesh’s gross domestic product (GDP) growth at 6.8 percent in the current fiscal.
GDP is a monetary measure of the market value of all the final goods and services produced in a country in a specific time period.
The growth projection for the current fiscal reflects a strong recovery supported by strengthening manufacturing, continued expansion in the global economy and effective government recovery policies, the ADB said.
On the other hand, inflation is expected to slightly edge up to 5.8 percent and current account deficit to narrow down to 0.6 percent of GDP in financial year (FY) 22.
However, FY22 growth is expected to remain below pre-pandemic levels, as per the Asian Development Outlook (ADO) 2021 report released on Wednesday.
The main risk is the re-escalation of Covid infections in Bangladesh or major advanced economies, clipping domestic and external demand, according to the global lender.
“The government’s policies for saving lives while protecting livelihoods underpinned the recovery process in Bangladesh, making it one of the few countries in the world sustaining commendable economic growth in recent difficult times,” said ADB Country Director Manmohan Parkash.
He said that prudent macroeconomic management, and efficient implementation of stimulus measures and social protection programmes have helped. “Continued efforts for job creation, quick vaccination, and improving domestic resource mobilization will further accelerate the recovery process.”
Appreciating recent initiatives in the areas of financial inclusion, and expanding social protection, Parkash said, “Sustained reforms to increase business competitiveness, foreign investment, export diversification, skills development, and technology adoption will stimulate private sector investments and hasten economic recovery.”
In FY22, improving consumer confidence and the government’s fiscal and monetary stimulus measures are expected to boost private and public investment.
The central bank’s expansionary and accommodative monetary policy is expected to support the projected growth while keeping inflation contained. Strong remittances will stimulate private consumption, the ADB said.
Inflation is expected to edge up to 5.8 percent in FY2022 reflecting recovery in economic activity. Continued implementation of the increased fiscal and monetary stimulus measures is expected to create inflationary pressures.
A good crop outlook, consumer caution and underutilized production capacity should mitigate any upward pressure on prices. Domestic administered prices for fuel may cushion the impact of increased crude oil prices, the report said.