Bangladesh's economy to grow slightly faster by 6.5%

Bangladesh's gross domestic product (GDP) is expected to grow by 6.5 per cent in ongoing fiscal year, compared to the 6.0 per cent growth in FY2023, according to the latest Asian Development Bank (ADB) report released today.

The report "Asian Development Outlook (ADO) September 2023" states that the slightly faster growth forecast reflects an improvement in domestic demand and better export growth due to economic recovery in the euro area.

Inflation is projected to ease to 6.6 per cent in the current fiscal from 9.0 per cent in FY2023. The current account deficit is expected to slightly narrow, from 0.7 per cent of GDP in the previous fiscal to 0.5 per cent in FY2024, as remittance growth improves.

The main risk to this growth projection is a further deterioration in export growth if global demand is weaker than expected, reads the report.

"The government is managing relatively well against the external economic uncertainties, while advancing infrastructure development and critical reforms to improve the investment climate," said ADB Country Director Edimon Ginting.

These key structural reforms include strengthening public financial management, enhancing domestic resource mobilisation, improving logistics, and deepening the financial sector, which are critical for private sector development, export diversification and productive job creation in the medium term, said Ginting.

"Continued high oil prices also provides a good incentive to accelerate reforms to expand domestic renewable energy supply and achieve the country's climate change goals."

The report states that moderate inflation and an increase in remittances will contribute to reviving private consumption, while the completion of a number of major government infrastructure projects will increase investment. Private investment, however, may be dampened by the initial higher interest rates following the enhancement in the country's monetary policy framework.

Inflation is expected to ease with some fall in global non-fuel commodity prices, higher agricultural production, and the initial tightening of monetary policy under the new framework.