The World Bank has downgraded the economic growth outlook of Bangladesh for the fiscal year 2024-25 to 4 per cent, while the output is estimated to have grown by 5.2 per cent in the fiscal year 2023-24.
The global financial institution came up with the forecast in a latest report – South Asia Development UPdate for October 2024 – on Thursday. Earlier in June, it predicted a 5.7 per cent growth for the Bangladesh economy in the fiscal year 2024-25.
According to the latest World Bank report, the output growth in Bangladesh is expected to slow from 5.2 per cent in the fiscal year 2023-24 to within the range of 3.2 to 5.2 per cent (with a mid-point of 4.0 per cent) in the fiscal year 2024-25.
Recent developments in Bangladesh caused significant economic disruptions, including a decline in industrial and service sector activities, export shipments, and remittance inflows
Regarding the overall situation in Bangladesh, the report noted that an interim government took office on 8 August 2024, following the resignation of the former prime minister amid the widespread student-led protests.
These events caused significant economic disruptions, including a decline in industrial and service sector activities, export shipments, and remittance inflows. Since then, the economy has stabilised and remittance inflows increased.
The wide range of the growth projection reflects the lack of available or reliable data in recent months, and significant uncertainties around the political and economic outlook following the recent political turmoil. In the short term, political uncertainties are expected to keep investment and industrial growth subdued.
In Bangladesh, recent floods are expected to set back agricultural production modestly. In the medium to long term, growth is expected to pick up gradually, benefiting from critical reforms in the financial sector, increased domestic resource mobilization, improved business climate, and increased trade.
For South Asia, the report noted that the output growth is on track to exceed earlier expectations, at 6.4 per cent in 2024 and 6.2 per cent a year in 2025–26, in a broad-based upturn. It is expected to remain higher than in all other emerging market and developing economy regions.
Martin Raiser, vice president of the World Bank for the South Asia region, said in the foreword of the report, “South Asia remains the fastest-growing emerging market and developing economy region in the world. In fact, growth is now on track to be higher than anticipated six months ago, helped by strong domestic demand in India and faster recoveries in most other South Asian countries.”
Highlighting different barriers to developments in the region, he said opening up labour market opportunities to women, and global trade and investment opportunities to firms, would help unlock South Asia’s considerable untapped potential.