Bangladesh's economy likely to grow 5.6% in FY'24

Bangladesh’s economic growth is expected to grow 5.6% in the fiscal year 2023-24 (July 2023 to June 2024), the World Bank said in the January edition of its flagship report Global Economic Prospectus.

The World Bank said, "Inflation is likely to remain elevated, weighing on private consumption."

"As foreign exchange reserves are likely to stay low, import restrictions are expected to continue and impede private investment."

"In contrast, public investment is envisaged to remain resilient. Growth is expected to rise in FY2024-25 as inflationary pressure recedes."

"Additionally, in Bangladesh, slower-than-anticipated growth in its export destinations, particularly in the European Union, could pose a risk to growth prospects."

The global lender pointed out that unrest over elections could dampen activity in the private sector, including foreign investment, in a number of countries including Bangladesh.

"If combined with political or social unrest and elevated violence, this could further disrupt and weaken economic growth."

"However, the implementation of policies to reduce uncertainty and strengthen growth potential after elections could lead to an improvement in prospects."

The global lender estimated that the growth have slowed to 6.0% in FY2022-23, as activity was hampered by import restrictions and rising material and energy costs, as well as mounting external and financial pressures.

The report said inflation rate was in increasing trend in 2023, mainly driven by rising food prices and currency depreciation, resulting in tighter monetary policy.

"Balance of payments deteriorated, along with a decline in foreign exchange reserves. Financial sector vulnerabilities rose, as nonperforming and other stressed loans increased."

However, the government of Bangladesh has set a growth target of 7.5% for the fiscal year 2023-24. In October last year, the World Bank gave similar estimation in its Bangladesh Development Update report.