Despite the economic headwinds triggered by the Russia-Ukraine war and private sector credit witnessing slower growth in May, Bangladesh ranked second in this growth among the neighbouring countries, including India, Vietnam, Indonesia and Pakistan.
The Bangladesh Bank released the data in the monetary policy statement (MPS) for the first half of the fiscal year 2023-24 on Sunday.
India witnessed 14.6 per cent private credit growth, the highest among the peers, followed by Bangladesh at 11.1 per cent, Vietnam at 10.5 per cent, Indonesia at 7.7 per cent, and Pakistan at 2.8 per cent, which is the lowest, according to the latest statistics from their respective central banks.
The MPS said, “Private sector credit exhibited a slower growth of 11.10 per cent (YoY) in May 2023, following its growth rate of 12.94 per cent in May 2022. This growth was mainly driven by higher domestic and international commodity prices, as well as significant depreciation of the Bangladesh Taka (BDT) against the US dollar (USD).”
“The rebound of economic activities following the recovery from the Covid-19 pandemic also played a crucial role in the growth of private sector credit, given the lower demand for import financing,” it said.
“However, private sector credit growth remained well below the programmed growth target of 14.10 per cent set for June 2023. Nevertheless, Bangladesh’s private sector credit growth, a reflection of private investment at the national level, performed fairly well compared to many other emerging and developing Asian economies,” it added.
The private sector credit growth and the implementation of various government mega projects, which reflect the national investment landscape, have remained fairly well in the second half of FY23.
Private sector credit growth reached 11.10 per cent (YoY) in May 2023 compared to 12.94 per cent in the same month of the previous year
Considering the government’s budgetary borrowing target, the public sector credit growth is projected to reach 30 per cent by June 2024.
In contrast, the private sector credit growth is projected at 11 per cent, reflecting the central bank’s supply side interventions to support necessary investment and employment-generating activities to achieve the targeted GDP growth of 7.5 per cent.
Considering the expansion of public and private sector credit, the domestic credit growth is projected at 15.3 per cent for FY24, the MPS said.
