Bangladesh’s growth to slow down amid election-related uncertainty: ADB

The Asian Development Bank (ADB) believes there is uncertainty in the economy of Bangladesh ahead of the 12th parliamentary elections to be held in January. At the same time, several other factors, including the crisis of power and energy, decline in exports and high inflation rate, are slowing down the economy.

For this reason, the ADB has lowered the GDP (gross domestic product) projection for Bangladesh. The ADB is assuming that the GDP of Bangladesh will be 6.2 per cent in the ongoing fiscal year.

The multinational agency published the December edition of the ‘Asian Development Outlook’ Tuesday.

The ADB said in the report that the growth forecast for the fiscal ending 30 June has been lowered. However, there is no mention in the report as to how much has been lowered. Speaking to Prothom Alo, an official at ADB’s Dhaka office said the GDP forecast for Bangladesh has been lowered to 6.2 per cent.

Earlier, ADB predicted a GDP of 6.5 per cent for Bangladesh in the current fiscal. Meanwhile, the government has set a target of 7.5 per cent this fiscal.

The ADB has cited several reasons behind not being able to reach expected GDP including the economic slowdown in the destination countries of Bangladesh’s product. According to the multinational agency, the economy of those countries has slowed down. As a result, Bangladesh is seeing a medium growth in export and production.

Apart from Bangladesh, the ADB has predicted a decline in the growth of Maldives.

The ADB assumes a further rise in the inflation rate of Bangladesh in the current fiscal. However, it didn’t specify to what extent the inflation rate will rise. The ADB list of the countries likely to see a rise in inflation includes four countries – Kazakhstan, Myanmar, South Korea and Bangladesh.

The ADB said that among the South Asian countries, a high inflation rate is still prevailing in Bangladesh and Nepal.

Regarding the inflation in Bangladesh, the ADB said despite several initiatives of the government, the inflation rate remained near the two digit figure every month from July to October. ADB expects a more tolerable inflation rate in Bangladesh in the coming months only if the government continues with the contractionary monetary policy.

The inflation rate is also likely to fall in case the prices of the products in the international markets fall and effective measures are taken to launch a market-based monetary policy. Besides, a good production may also lead to a decline in the inflation rate, the ADB predicts.

It further said the overall GDP of Asia in 2023 could be around 4.9 per cent on average. It can slightly fall to 4.8 per cent the next year. Meanwhile, the average inflation in Asia may decline slightly to 3 per cent in 2023. However, it is likely to rise to 3.6 per cent in 2024.

The ADB also predicts 6 per cent growth in India and 4.2 per cent growth in China in the 2024 fiscal.