The multilateral lending agency attributed the growth to continued buoyant exports, robust private consumption with higher remittances, accommodative monetary policy, ongoing reform to improve business climate for private investment, and public infrastructure investment.
On the supply side, sustained strong growth in industry and agriculture are expected to be the main drivers of growth in FY2020, said the ADB.
“Bangladesh economy is in a good shape and is likely to continue to grow. At 8 percent growth in FY2020, ADB’s outlook indicates that Bangladesh is likely to continue as the fastest growing economy in Asia and the Pacific,” said ADB Country Director Manmohan Parkash adding that favourable trade prospects are expected to continue despite a weaker global growth.
Launching the Asian Development Outlook (ADO) 2019 Update at its office in the city, he said exports and remittances are likely to be further strengthened.
“Strong public investment due to continued policy environment and expediting implementation of large infrastructure projects are also envisaged. We see such momentum to continue in FY2020,” said the ADB Country Director.
Parkash said such strong performance and prospects are commendable, especially under the current situation and near term forecast of moderating growth in developing Asia.
Challenges for Sustained Development
To sustain this momentum in the medium- to long-term, the ADB Country Director said there are several challenges the country needs to overcome.
He said Bangladesh requires expanded industrial base, a diversified export basket, equitable development in urban and rural areas, and a sound financial system as the ADB indicated in the previous Bangladesh country chapters.
The ADB Country Director said the authorities must speed up reforms to improve the business environment for vibrant private sector development.
The implementation of the VAT law is a welcome development. However, the further expansion of tax base and promotion of efficient tax administration are required for improved resource mobilization, he said.
The ADB Country Director said Bangladesh also needs to further develop human capital to meet the growing needs from private sector.
He said such momentum needs to be sustained in the medium- to long-term to achieve its goal of becoming an upper middle-income country and high-income country.
Parkash said this will require continued focus on prudent macroeconomic policies, sound debt management, resource mobilisation, and strengthening of the banking sector.
He said the government should continue its support in removing infrastructure constraints, promoting skills development, and improving the cost of doing business.
All these measures, he said, will help the government achieve its long-term vision.
ADB Senior Economist Soon Chan Hong presented a summary of the economic performance and prospects of the countries in the Asia-Pacific region.
A key highlight of the ADO 2019 update is that the growth in developing Asia is moderating but remains robust.
Compared to a projection of 5.7 percent gross domestic product (GDP) growth earlier, the revised estimate is 5.4 percent for fiscal year (FY) 2019 and 5.5 percent from 5.6 percent for FY 2020.
This is largely due to the slowing down of the global trade and weakening of investment, according to the ADB.
South Asia estimates have also been revised downwards, with growth now projected to be 6.2 percent in 2019, down from 6.8 percent earlier, largely due to slowdown in India and 6.7 percent from 6.9 percent in 2020.
The good news, however, is that Bangladesh GDP growth is now estimated at 8.1 percent in FY 2019 from an earlier estimate of 8.0 percent, reflecting its robustness in nature, said Parkash.
This is also higher than the 7.9 percent in FY2018 and Bangladesh continues to be the fastest growing economy in Asia and the Pacific, he said.
On the supply side, he said, a strong expansion in industry and services lifted the robust growth.
The pick-up in exports due to stronger demand in the US and some newer markets led the brisk production in large and medium-sized industries.
On the demand side, higher net exports and strong private consumption supported by a record remittance of $16.4 billion contributed much to the higher GDP growth.