Home ›› 07 Apr 2022 ›› Front
Bangladesh’s economy is projected to expand 6.9 per cent in Fiscal Year 2021-2022 buoyed by the external trade and recovery in domestic economic activities, according to the Asian Development Bank (ADB).
It also estimated that inflation will edge up to 6 per cent in this fiscal due to rise in global food and fuel prices as well as the Russia-Ukraine crisis.
The regional lender made the disclosure in its virtual flagship report “Asian Development Outlook 2022” released globally on Wednesday.
The Manila-based multi-lateral funding agency said the growth in South Asia is projected to slow to 7 per cent in 2022 before picking up to 7.4 per cent in 2023.
Economic outlook for FY22, FY23
Bangladesh’s GDP growth is projected to sustain the strong momentum at 6.9 per cent and 7.1 per cent in FY22 and FY23 respectively, said the report.
For the current fiscal year, the government set a 7.2 per cent GDP. The projection is almost close to achievement.
A strong expansion in exports, increased budget spending, public investment in larger infrastructure projects, and stronger private investment will play key roles behind this robust growth outlook, it added.
“The ongoing socio-economic recovery needs to be accelerated by enhancing domestic resource mobilisation, incentivising the private sector to create products and services, promoting modern green technologies, and fostering knowledge and innovation. There is a need for strong political leadership for good reform to taxation,” said Country Director Edimon Ginting.
“We expect private investment to rise further with improvement in investor confidence. Public investment is also expected to grow with the government’s large investment projects to meet huge unmet infrastructure needs of the country,” said the regional lender.
Industry output is expected to increase strongly on rising earnings particularly from apparel exports.
Inflation is projected to edge up to 6 per cent in FY22 due to rise in global food and fuel prices and impact of Russian invasion of Ukraine and rise in domestic administered prices of diesel and kerosene.
Further down the line, in FY23, inflation is expected to moderate to 5.9 per cent on lower outlook for global food and oil prices.
The ADB also apprehends that price adjustments for LPG or LNG in coming months may also increase inflationary pressure.
Downside risks
In the coming days, the main risk for Bangladesh is higher commodity and oil prices caused by Russian-Ukraine war and impacts of supply chain disruption due to Covid-19.
“In the face of the pandemic, Bangladesh economy has demonstrated commendable economic resilience by registering 6.9 per cent GDP growth in FY21, said Edimon Ginting.
With 6.9 per cent projected growth in FY22 and 7.1 per cent in FY23, Bangladesh economy is now moving to a higher growth trajectory, he added.
However, to sustain the higher growth trajectory over medium and long term, and making it more inclusive, a few key steps would be necessary.
First on growth itself, efforts are needed to boost competitiveness and employment while private sector development and regulatory bottlenecks need to be reduced, he suggested.
To improve efficiency of domestic value chain, critical infrastructures have to be built.
The regional lender also suggested an increase in spending on education, health and social protection for inclusive growth.
To generate enough funds for these priorities, significant efforts are needed to improve domestic resource mobilisation.
Asked by journalists’ in a question-answer session what Bangladesh could learn from the situation in Sri Lanka, the country director said in that context Bangladesh should have maintained macroeconomic stability and prudent fiscal management.
He mentioned Sri Lanka was doing well until the war. There was high growth but it could not keep up. This is not the case in Bangladesh. The country (Bangladesh) is able to sustain its growth. ADB is a partner with Sri Lanka and it continues to help the county.
