Bangladesh's GDP is likely to see 6.5 per cent growth in FY2023-24 but it will be higher compared to the 6.03 per cent growth in FY2022-23, according to the latest Asian Development Bank (ADB) report released on Wednesday.
The government had set a 7.5 per cent GDP growth target in the FY24 national budget.
The slightly faster growth forecast reflects an improvement in domestic demand and better export growth due to economic recovery in the euro area. Inflation is expected to ease from 9 per cent in FY23 to 6.6 per cent in FY24 with some fall in global nonfuel commodity prices, expected higher agricultural production and the initial tightening of monetary policy under the new framework.
However, the country is facing higher inflationary pressure from the beginning of the current fiscal year compared to the previous. In July, the inflation rate was 9.69 per cent, which was 7.48 per cent in the same month of the previous year.
The current account deficit is expected to slightly narrow from 0.7 per cent of GDP in FY23 to 0.5 per cent of GDP in FY24 as remittance growth improves. The main risk to this growth projection is a further deterioration in export growth if global demand is weaker than expected, ADB said in a press release.
The government is managing relatively well against the external economic uncertainties while advancing infrastructure development and critical reforms to improve the investment climate, said ADB Country Director Edimon Ginting.
These key structural reforms include strengthening public financial management, enhancing domestic resource mobilisation, improving logistics, and deepening the financial sector, which is critical for private sector development, export diversification and productive job creation in the medium term, he said.
"Continued high oil prices also provide a good incentive to accelerate reforms to expand domestic renewable energy supply and achieve the country's climate change goals," Ginting added.
The Asian Development Outlook (ADO) September 2023 states that moderate inflation and an increase in remittances will contribute to reviving private consumption, while the completion of several major government infrastructure projects will increase investment.
Private investment, however, may be dampened by the initial higher interest rates following the enhancement in the country's monetary policy framework.
In its 50-year partnership with Bangladesh, ADB has mobilised over $50 billion in loans and grants, including co-financing, to improve infrastructure, public services and social development. ADB's current sovereign portfolio in Bangladesh has 53 projects worth about $13 billion.
