World Bank lowers GDP growth forecast for Bangladesh to 5.6pc

World Bank country director Abdoulaye Seck and other senior officials speak at a press conference in Dhaka on 3 October, 2023.
Prothom Alo

The World Bank has forecast that the growth of gross domestic product (GDP) in Bangladesh would slow down to 5.6 per cent in the current fiscal year, compared to a 6.3 per cent growth in the previous fiscal.

In a latest report released on Tuesday, the World Bank cited concerns over high inflation and other economic constraints for the sluggish growth forecast.

However, the government has set an ambitious growth target of 7.5 per cent for the fiscal year 2023-24.

The report, titled Bangladesh Development Update, pointed out the persistent high inflation as one of the major challenges for the economy and said it may continue in the coming days.

The inflationary trend will depend on both domestic and international market prices of goods. If the authorities manage to mitigate the inflationary pressure and bring the overseas trade to normalcy, the GDP growth may see a slight rise to 5.8 per cent in the current fiscal, the report added.

Addressing a press briefing at its Dhaka office on Tuesday, Abdoulaye Seck, country director of World Bank, said the inflationary pressure is mounting due to fuel price hike and depreciation of local currency. Eventually, it intensified pressure on people's consumption.

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Noting a disproportionate rise of wage and cost of food, he laid emphasis on effective usage of monetary policy to lessen the inflationary pressure.

The World Bank official also suggested a gradual hike in the interest rate ceiling to combat the inflationary pressure and an initiative to reduce financial sector risks through enhanced banking sector supervision.

Besides, he suggested a series of economic reforms, including de-pegging the exchange rate, modernising monetary policy, and restructuring the fiscal sector.