The World Bank has predicted that the Gross Domestic Product (GDP) of Bangladesh would grow by 5.2 per cent in the current fiscal year of 2022-23, though the government set a growth target of 7.5 per cent.
In its development update released recently, the global lender also forecast that the GDP would grow by 6.2 per cent in the next fiscal had the inflationary pressure been relaxed in the meantime.
The growth forecast was the same in the World Bank’s global economic prospects released in January this year.
Earlier in October 2022, the World Bank had foreseen a growth of 6.1 per cent for the fiscal year 2022-23, though it previously predicted 6.7 per cent growth in June. In this sense, the anticipated growth rate went down remarkably in the latest report.
According to the World Bank, the actual growth of GDP would drop to 5.2 per cent in the current fiscal due to high inflation, restrictions on imports and different sorts of strictures in the financial sector, in addition to the global economic turmoil.
It also said the inflationary pressure intensified here due to high commodity prices. The deficit in balance of payments rose to USD 7.2 billion in the first half of fiscal year 2022-23, which was at USD 5.3 billion in the previous year’s corresponding period.
The World Bank identified the multiple exchange rate of dollar as the reason for the mounting pressure on the balance of payments. It, they argue, is discouraging exports and reducing overseas income. A market-based single exchange rate would bring balance to foreign trade.
The World Bank’s country director for Bangladesh and Bhutan, Abdoulaye Seck, said the Russia-Ukraine war and global uncertainty affected many countries around the world. Bangladesh will also take a heat from rising commodity prices, interest rates and slowing global growth.
He, however, said the World Bank will support Bangladesh's efforts to maintain the growing streak through reforms and to increase its ability to turn around.
The World Bank titled the development update report as “Strong Structural Reforms Can Help Bangladesh Sustain Growth”. It said Bangladesh can tackle the current challenges through structural reforms, such as trade reforms and export diversification.