World Bank doubles GDP growth forecast for Bangladesh

The World Bank projected 1.6 percent of gross domestic product (GDP) growth of Bangladesh in January. But now_ the Washington-based lender has more than doubled its GDP growth prediction for the country for the current fiscal year as the economy shows signs of recovery.

WB expects the economy to grow 3.6 per cent in the FY2020-21. "The economy is expected to recover gradually_ with real GDP growth projected at 3.6 per cent in FY21_" the they said in a document.

The new prediction was made in a paper of the Bangladesh Third Programmatic Jobs Development Policy Credit. The new GDP growth prediction is still far lower than the government's estimate of 7.4% for the current fiscal year.

In January_ the lender said in Bangladesh growth was estimated to have decelerated to 2 percent in the last fiscal year. It is now projecting a growth of 2.4 percent for FY20_ according to the document_ which was prepared in February.

The government's provisional estimate showed the GDP had grown by 5.24 percent in the last fiscal year.

Private consumption growth will accelerate as pandemic-related disruptions wane in the second half of the fiscal year_ supported by remittance inflows_ the development lender said.

"Export performance is expected to recover through FY21 gradually_ as improving economic conditions in developed markets support demand for RMG exports."

In the medium term_ continued recovery of overall growth will be supported by increased export demand_ rising private consumption_ and higher public capital expenditure_ the document said.

The fiscal deficit is projected to reach 6 percent of GDP in FY21 and to moderate in the medium term.

While downside risks are significant_ Bangladesh has a record of sustained macroeconomic stability over the past three decades through various global crises_ internal political instability and natural calamities_ providing additional assurance of its capacity to handle the emerging macroeconomic risks in the near and medium-term_ the WB said.

"Bangladesh's low debt to GDP ratio provides a significant buffer_ and despite the increase in spending to deal with the pandemic_ the country continues to be at low risk of debt distress."