The World Bank has projected 7.2 per cent GDP growth rate for Bangladesh in the 2019-20 fiscal year while 7.3 per cent in the following fiscal year, reports news agency UNB.
Bangladesh, the third-largest economy in the region, fared better than India and Pakistan, with the growth officially estimated at 8.1 per cent in FY2018-19, said the World Bank in its Global Economic Prospects published on Thursday.
On 31 July last year, Bangladesh Bank in its one-year monetary policy statement (MPS) for FY2019-20 hoped to achieve the 8.2 per cent GDP growth keeping the inflation rate within 5.50 per cent.
On 25 September, the Asian Development Bank (ADB) projected an 8 per cent GDP growth in Bangladesh.
The growth in Bangladesh is projected to remain above 7 per cent through the forecast horizon.
A solid macroeconomic framework, political stability, implementation of planned public infrastructure projects, and ongoing reforms to improve the business environment underlie this projection, said the report.
In South Asian region, the growth is expected to rise to 5.5 per cent in 2020, assuming a modest rebound in domestic demand and as economic activity benefits from improved business confidence and support from infrastructure investments in Bangladesh.
According to the WB report, Bangladesh’s exports showed signs of softening in recent months, after a substantial increase in exports to major trade partners in the last fiscal year.
While regional exports softened in aggregate, Bangladesh’s export growth accelerated, partly reflecting trade diversion amid trade tensions between major economies.
Monetary policy was broadly accommodative amid weak activity and subdued inflation. Current account deficits narrowed with weakening imports, the WB report said.
Besides the GDP growth, there are some risks in Bangladesh, showed the WB report.
It said lack of progress in reforms to improve tax collection could result in more acute revenue shortfalls in Bangladeshand put further pressure on elevated fiscal deficits.
The WB report also showed that Bangladesh’s apparel sector benefited substantially from tailored policies during the 1990s and 2000s, which lifted barriers to international trade and investment and enhanced participation in global value chains.
Bangladesh’s duty-free access to the European Union (EU) from 2001 boosted knitwear exports to the EU between 2000 and 2004,enhanced the productivity, and helped the country expand to other export markets.