Asian Development Bank (ADB) has lowered Bangladesh’s gross domestic product (GDP) growth projection to the 5.3% for fiscal year (FY) 2023 from its earlier forecast of 6.6%.
In September 2022, it trimmed its growth forecast for Bangladesh's GDP to 6.6% for the current fiscal year from a 7.1% projection made in April.
Inflation is expected to accelerate from 6.2% in FY2022 to 8.7% in FY2023 as price pressures increase due to the upward adjustment of domestic-administered prices for fuel oil, gas, and electricity, and higher global commodity prices, said the latest ADB report, Asian Development Outlook (ADO) April 2023, released on Tuesday.
The ADO April 2023 states that private investment growth will be lower because of energy shortages and higher production costs. With a shortfall in revenue collection, austerity measures, and depleting foreign exchange reserves, public investment growth will also be slower.
The current account deficit is anticipated to narrow from 4.1% of GDP in FY2022 to 1.6% of GDP in FY2023 as imports loosen and remittances grow.
The main risk to this growth projection is a greater economic slowdown in Bangladesh’s major export destinations driven by global uncertainty over the prolonged political tensions.
The slower growth forecast reflects subdued domestic demand and weaker export expansion due to slow global growth following the Russian invasion of Ukraine.
“The government is managing relatively well against the impact of external adversities and has embarked on the reform programs as precautionary measures,” said ADB Country Director for Bangladesh Edimon Ginting.
“Accelerating key reforms during these difficult times would help the country sustain higher growth in the medium term. These reforms include strengthening public financial management and domestic resource mobilization, deepening the financial sector, and enhancing competitiveness to promote the creation of productive jobs in the private sector,” Ginting said.
“This is also a high time for enhancing resilience against the global energy market volatility by creating an enabling environment for rapid expansion of domestic renewable energy supply to reduce dependence on fossil fuels in line with the country’s climate agenda.”
In its 50-year partnership with Bangladesh, ADB has mobilized over $50 billion in loans and grants, including cofinancing, to improve infrastructure, public services, and social development for the country’s people. ADB’s current sovereign portfolio in Bangladesh has 50 projects worth about $11.9 billion.