Despite moderate growth in exports amid high inflationary pressure, election-centric uncertainty may hamper Bangladesh’s gross domestic product (GDP) growth at the end of the current financial year, says Asian Development Bank (ADB)’s latest forecast.
However, the inflationary pressure will show a downward trend in the coming months, add the report titled Asian Development Outlook, December 2023 published on Tuesday. The report however did not forecast an actual figure for the country’s FY24 GDP growth.
Economic slowdown in major export markets, power and energy shortages, and continued high inflation would have major impacts of the GDP growth. However, upside risks to the forecast include receding uncertainties over next January’s elections.
In September this year, the Manila based lender forecasted that Bangladesh’s GDP growth will touch 6.4 per cent in FY24. While the government had set the target at 7.5 per cent in the FY24 budget, but later on it set the target down to 6.5 per cent.
ADB believes that apart from Bangladesh, Maldives will also see a slow growth in the South Asian region, while India will see 6.7 per cent growth in FY24.
The inflation forecast for South Asia is unchanged at 8.6 per cent for 2023, but revised up to 6.7 per cent for 2024. This revision reflects higher inflation forecasts for Bangladesh and Nepal.
Bangladesh has been under the pressure of high inflation throughout this year. The country is witnessing the highest inflation among South Asian countries after Pakistan. In recent months, food inflation exceeded 12.5 per cent, the highest in a decade in Bangladesh.
The general inflation is hovering around 10 per cent.
ADB is optimistic that the contractionary monetary policy may help Bangladesh tame inflation.
The report states, “Despite several efforts to reduce inflation, the monthly rate in Bangladesh was close to double digits in July-October due to rising food inflation.
“Inflation is expected to ease in the coming months on continued contractionary monetary policy, measures taken to secure a market-based exchange rate, lower global commodity prices, and a better crop outlook.”
ADB also mentions that Asia's average GDP growth in 2023 could be 4.9 per cent. In 2024, it may decrease slightly to 4.8 per cent. On the other hand, the average inflation in Asia may also decrease slightly to 3.5 per cent in 2023. But in 2024 it may increase to 3.6 per cent.
