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IMF revises Bangladesh’s GDP growth to 5.7%

There is nothing to worry about the IMF's forecast, says finance minister
Niaz Mahmud from Washington DC
17 Apr 2024 18:53:29 | Update: 17 Apr 2024 18:53:29
IMF revises Bangladesh’s GDP growth to 5.7%

The International Monetary Fund (IMF) has lowered its forecast for Bangladesh’s economic growth to 5.7 per cent in FY24, though it had previously predicted a 6 per cent GDP growth for the country.

This global lender has additionally estimated the inflation rate at 9.3 per cent for Bangladesh in the current fiscal year. The IMF made the revised projection in its World Economic Outlook released on Tuesday.

Making the disclosure to the media after the first day of the World Bank and IMF spring meetings in Washington DC, Finance Minister Abul Hassan Mahmood Ali said, “There is nothing to worry about the IMF's forecast about the growth in FY24.”

He expressed satisfaction with the trend of economic transition, saying, “The country has started to recover from the crises, and people are beginning to feel some relief, but those with a negative mentality are not pleased.”

The IMF growth forecast highlighted various global and local challenges, including high inflation, unemployment, lower remittance flow, and a falling industrial investment target.

In October last year, the multilateral lending institution had estimated a growth rate of 6.5 per cent for Bangladesh, which was later revised downwards to 6 per cent for the same year.

According to the IMF, global inflation is projected to decrease from 6.8 per cent in 2023 to 5.9 per cent in 2024 and further it might drop to 4.5 per cent in 2025.

However, an IMF economist has expressed concerns over a possible increase in energy prices, and shipping costs due to geopolitical events, particularly the ongoing conflict between Iran and Israel.

The IMF forecast follows a similar prediction by the Asian Development Bank (ADB) which stated that the country's GDP will expand by 6.1 per cent in the same period, due to increasing exports.

However, the World Bank has recently stated that Bangladesh’s growth will be limited due to high inflation, resulting in reduced private consumption.

According to the World Bank, the country's GDP is expected to expand by 5.6 per cent in FY2023-24, which is below the average annual growth rate of 6.6 per cent over the previous decade, before the Covid-19 pandemic.

IMF Research Department Director Pierre-Olivier Gourinchas said at a press briefing on Tuesday that the global economy continues to show remarkable resilience, with stable growth and decreasing inflation.

He said, “There are still many challenges that need to be addressed. The world economy grew by 3.2 per cent in 2023 and is expected to remain constant in 2024 and 2025.

“This is an upgrade of 0.3 per cent points from the October projections for 2024, due to stronger economic activity expected in the US, China, and other large emerging markets, but weaker activity in the Euro Area.”

Inflation is on a downward trend, with median inflation expected to decrease from 4 per cent at the end of last year to 2.8 per cent by the end of this year, and 2.4 per cent by the end of 2025. This suggests a smooth transition for the economy, Gourinchas pointed out.