Saturday, 21 December, 2024
The World Bank forecasts that Bangladesh’s economic growth will decline to 4 per cent in the 2024-25 fiscal year, citing uncertainties stemming from the shifting political landscape following a power transition.
In its latest outlook released on Thursday, the World Bank reported this significant drop from its earlier projection of 5.7 per cent made in April. The organization attributed this sharp revision to political changes and other contributing factors.
The World Bank projects economic growth in Bangladesh for the fiscal year 2023-24 at 5.2 percent, slowing to 4 percent by 2024-25.
The interim government took office on Aug 8 following the resignation of the former prime minister Hasina amid widespread student-led protests.
These events have caused significant economic disruptions, including a decline in industrial and service sector activities and reduced flows of export shipments and remittances.
Despite these challenges, the report notes recent improvements in economic stability and an increase in remittance inflows.
Inflation outlooks remain less optimistic. The Washington-based institution highlights that while inflation across South Asia peaked in 2022 and has begun to decline, this has not yet occurred in Bangladesh.
While most South Asian economies are showing signs of recovery, Bangladesh remains an exception, the report says.
The region’s growth is shifting broadly in the opposite direction compared to earlier expectations, remaining on the right track.
The Asian Development Bank, or ADB, another development partner, has also revised its forecast for the current fiscal year. It previously projected growth at 6.6 per cent but now estimates it will fall to 5.1 per cent amid chaos in industry and production stagnation following the power change.
The ousted Awami League government had planned a budget for the 2024-25 fiscal year based on a growth target of 6.75 per cent. However, the political turmoil triggered by movements for quota reforms in government jobs eventually led to a change in circumstances.
Following the fall of the Sheikh Hasina administration, the interim government has announced plans for state reforms and economic recovery.
The World Bank's "South Asia Development" report, published two months after the interim government took office, says Bangladesh's growth will slow to between 3.2 percent and 5.2 percent, with the midpoint at 4 percent.
Previously, in April, the World Bank had forecast a growth rate of 5.7 percent for the current fiscal year.
The updated report says sluggish garment exports and the current political situation following mass protests are contributing factors to the decline in growth.
Political uncertainty is likely to hamper investment and industrial growth in the near future, while recent floods are expected to negatively affect the economy, particularly agricultural production.
Despite other countries lowering their policy interest rates to bring inflation under control, Bangladesh has not achieved this.
However, Finance Advisor Salehuddin Ahmed claims their administration has managed to halt rising inflation within two months of taking office.
He said if people remained patient, there would be relief in the prices of essential goods.
He urged the public to exercise patience for some time to access affordable goods, adding: “Officially, inflation has decreased by 1 percent. We have managed to stabilise inflation at a reasonable level.”
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The World Bank forecasts that Bangladesh’s economic growth will decline to 4 per cent in the 2024-25 fiscal year, citing uncertainties stemming from the shifting political landscape following a power transition.
In its latest outlook released on Thursday, the World Bank reported this significant drop from its earlier projection of 5.7 per cent made in April. The organization attributed this sharp revision to political changes and other contributing factors.
The World Bank projects economic growth in Bangladesh for the fiscal year 2023-24 at 5.2 percent, slowing to 4 percent by 2024-25.
The interim government took office on Aug 8 following the resignation of the former prime minister Hasina amid widespread student-led protests.
These events have caused significant economic disruptions, including a decline in industrial and service sector activities and reduced flows of export shipments and remittances.
Despite these challenges, the report notes recent improvements in economic stability and an increase in remittance inflows.
Inflation outlooks remain less optimistic. The Washington-based institution highlights that while inflation across South Asia peaked in 2022 and has begun to decline, this has not yet occurred in Bangladesh.
While most South Asian economies are showing signs of recovery, Bangladesh remains an exception, the report says.
The region’s growth is shifting broadly in the opposite direction compared to earlier expectations, remaining on the right track.
The Asian Development Bank, or ADB, another development partner, has also revised its forecast for the current fiscal year. It previously projected growth at 6.6 per cent but now estimates it will fall to 5.1 per cent amid chaos in industry and production stagnation following the power change.
The ousted Awami League government had planned a budget for the 2024-25 fiscal year based on a growth target of 6.75 per cent. However, the political turmoil triggered by movements for quota reforms in government jobs eventually led to a change in circumstances.
Following the fall of the Sheikh Hasina administration, the interim government has announced plans for state reforms and economic recovery.
The World Bank's "South Asia Development" report, published two months after the interim government took office, says Bangladesh's growth will slow to between 3.2 percent and 5.2 percent, with the midpoint at 4 percent.
Previously, in April, the World Bank had forecast a growth rate of 5.7 percent for the current fiscal year.
The updated report says sluggish garment exports and the current political situation following mass protests are contributing factors to the decline in growth.
Political uncertainty is likely to hamper investment and industrial growth in the near future, while recent floods are expected to negatively affect the economy, particularly agricultural production.
Despite other countries lowering their policy interest rates to bring inflation under control, Bangladesh has not achieved this.
However, Finance Advisor Salehuddin Ahmed claims their administration has managed to halt rising inflation within two months of taking office.
He said if people remained patient, there would be relief in the prices of essential goods.
He urged the public to exercise patience for some time to access affordable goods, adding: “Officially, inflation has decreased by 1 percent. We have managed to stabilise inflation at a reasonable level.”
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