Bangladesh economy shows early signs of recovery: WB

Ibrahim Hossain Ovi

Bangladesh’s economy is showing nascent signs of recovery backed by a rebound in exports, strong remittance inflows, and the ongoing vaccination programme, says a new World Bank report.

The report titled “Bangladesh Development Update - Moving Forward: Connectivity and Logistics to strengthen Competitiveness,” was launched through a virtual media briefing on Monday.

After being severely affected by the COVID 19 pandemic-which slowed growth and for the first time in two decades reversed the poverty reduction trend - the economy is recovering gradually, said the report.

Over the first half of FY21, factories reopened and exports rebounded. However, the economy faces elevated risks in the context of the ongoing COVID-19 pandemic, it added.

“Despite the uncertainty created by COVID-19, the outlook for Bangladesh’s economy is positive. Much of the pace of recovery will depend on how fast mass vaccination can be achieved,” said Mercy MiyangTembon, World Bank Country Director for Bangladesh and Bhutan.

“The World Bank will support a resilient recovery, helping Bangladesh achieve green, smart, and inclusive growth.”

In Dhaka and Chattogram, the country’s two largest cities, recent surveys pointed to a recovery in the labour market in the first half of FY21, said the report.

With the gradual restoration of livelihoods, food security in poor and slum areas improved. In Chattogram, the percentage of adults working had returned to pre-COVID levels by February 2021, it added.

In FY21, growth will be supported by a recovery in manufacturing as export demand strengthens, a rebound in construction supported by accelerating public investment, and robust service sector growth as the vaccination campaign progress, report finding showed.

Inflation is projected to remain close to Bangladesh Bank’s 5.5 per cent target, and the fiscal deficit is projected to remain at 6 per cent of GDP, it added.

Risks to the outlook remain elevated. A fragile global economic recovery could dampen demand for RMG products and limit job opportunities for migrant workers, said the global lender.

The COVID-19 pandemic has exacerbated financial sector risks stemming from nonperforming loans and weaknesses in bank governance and risk management, it added.

“The COVID-19 pandemic has led to an unpreceded global recession,” said Bernard Haven, World Bank Senior Economist, and co-author of the report. “Protecting households affected by the pandemic remains an urgent priority, while structural reforms can help accelerate the recovery.”