GDP growth to slow down, inflation to decrease

The year 2024 will bring good news for Bangladesh, but there is also apprehensions of bad news too. The good news is the decline of inflation, while the bad news is the slow growth of GDP. These forecasts were published recently in a United Nations report.

According to the UN, the average inflation rate in Bangladesh in 2024 may decline to 6.8 per cent while GDP will slightly decrease to 5.6 per cent. Reducing the pressure of inflation is good for people while decreasing GDP growth is bad.

The UN's department of economic and social affairs published the report, "World Economic Situation and Prospects (WESP) 2024," on 4 January where such predictions were made. 

According to the UN forecast, inflation will decrease in Bangladesh in 2024. The average price inflation in this country was 9.6 per cent in 2023. In the new year, it will come down to 6.8 per cent. In 2025, it will further decrease to 5.5 per cent.

Since the start of the Russia-Ukraine war, global inflation has been on the rise. In August 2022, after the price of all types of fuel oil was increased by 50 per cent in Bangladesh, inflation increased. The people felt the pressure of inflation throughout the year 2023.

Inflation hit two records in 2023. One is that overall inflation rose to 9.94 per cent last May, the highest in 134 months or 11 years and two months. Earlier in March 2012, the highest inflation was seen at 10.10 per cent. Since then, inflation never went into double digits.

The other record was set on last August, when food inflation suddenly rose to double digits for the first time. According to the Bangladesh Bureau of Statistics (BBS), food inflation rose to 12.54 per cent in August, the highest in the last 11 years and 7 months. Earlier, food inflation in January 2012 was 12.73 per cent.

Among the South Asian countries, Sri Lanka and Pakistan have experienced hyperinflation (over 20 per cent) in the last three years.

According to the United Nations, inflation in Sri Lanka was 45 per cent in 2022. The following year it came down to 17-18 per cent.

The United Nations has predicted that inflation in the country will be 5 per cent in the current year 2024. On the other hand, inflation in Pakistan has risen to 30 per cent in 2023, which may come down to 19 per cent this year.

UN says, the number of people suffering from food insecurity in the year 2023 increased more in Bangladesh and Pakistan. The global organisation also said that high food prices have greatly increased food insecurity in developing countries, putting more pressure on poor households.

In the year 2023, a total of 238 million people in the world suffered from severe food insecurity. The previous year this number was 216 million.

UN says, the GDP growth of Bangladesh was 6 per cent in 2023. In the current year the GDP growth will slow a little to 5.6 per cent. But in 2025 it may improve to 5.8 per cent.

When asked about this, Taufiqul Islam Khan, a senior researcher at the Center for Policy Dialogue (CPD), said that almost all the macroeconomic indicators were under pressure for one and a half years.

How the economy will fare this year depends on what kind of reforms the government is taking to fix these indicators in 2024. He also said that to reduce inflation, the interest rate should be increased, the currency exchange rate should be based on the market and must be cost effective.

The UN also says that the taka was overvalues in the currency exchange rates in Bangladesh. According to a report of the last 10 years, the UN said that in Bangladesh the taka was most overvalued in 2020. The real exchange rate of taka that year was 155 per cent. Since then, it has started to decline. In 2023, it came down to 126 per cent