World Bank trimmed the GDP forecast for Bangladesh by 0.6 percentage point to 6.1 per cent for the current fiscal year.
On the other hand, it also increased the GDP projection by 0.8 percentage point to 7.2 per cent for FY22.
However, as per provisional data from the Bangladesh Bureau of Statistics (BBS), Bangladesh attained 7.25 per cent GDP in the last fiscal year.
“In Bangladesh, GDP growth is projected to decelerate slightly to 6.1 per cent in FY2022/23, as higher inflation and rolling electricity blackouts dampen the post-Covid recovery in consumption and investment,” said the World Bank report titled “South Asia Economic Focus 2022: Coping with Shocks Migration and the Road to Resilience” released Thursday.
The lack of reliable high-frequency indicators creates difficulties for policymakers in tracking economic developments, said the global lender.
Higher inflation is expected to dampen private consumption growth, following substantial energy price increases, it added.
Export growth is expected to slow, as economic conditions in key export markets deteriorate, while rolling blackouts, gas rationing, and rising input costs weigh on manufacturing output, the report mentioned.
“Pandemics, sudden swings in global liquidity and commodity prices, and extreme weather disasters were once tail-end risks. But all three have arrived in rapid succession over the past two years and are testing South Asia’s economies,” said Martin Raiser, World Bank Vice President for South Asia.
“In the face of these shocks, countries need to build stronger fiscal and monetary buffers, and reorient scarce resources towards strengthening resilience to protect their people.”
Projection for the region
The report also projected regional growth to average 5.8 per cent this year - a downward revision of 1 percentage point from the forecast made in June.
This follows the growth of 7.8 per cent in 2021 when most countries were rebounding from the pandemic slump.
Beset with Sri Lanka’s economic crisis, Pakistan’s catastrophic floods, a global slowdown, and the impacts of the war in Ukraine, South Asia faces an unprecedented combination of shocks on top of the lingering scars of the Covid-19 pandemic, said WB.
Growth in the region is dampening, says the World Bank in its twice-a-year update, underscoring the need for countries to build resilience, it added.
“Labor mobility across and within countries enables economic development by allowing people to move to locations where they are more productive. It also helps adjust to shocks such as climate events to which South Asia’s rural poor are particularly vulnerable,” said Hans Timmer, World Bank Chief Economist for South Asia.
“Removing restrictions to labor mobility is vital to the region’s resilience and its long-term development.”
To this end, the report offers two recommendations. Firstly, cutting the costs migrants face should be high on the policy agenda. Secondly, policymakers can de-risk migration through several means including more flexible visa policies, mechanisms to support migrant workers during shocks, and social protection programs.
