World Bank
Bangladesh’s GDP to increase by 3.6 % in 2020-2021, WB forecasts
World Bank on Wednesday forecast that Bangladesh’s Gross Domestic Product (GDP) will increase by 3.6% in 2020-2021 fiscal year, due to better than expected remittance inflows.
The international lending agency said this in its twice-a-year-regional update that released on Wednesday.
It also forecast that the GDP growth will be 5.1% and 6.2% in 2021-22 and 2022-23 FYs respectively.
Earlier in January, 2021 the WB projected that the GDP in 2020-21 and 2021-22 FYs will be 2%, and 1.7% respectively.
Read WB okays $250 million for Bangladesh to respond to COVID-19 pandemic
It said that prospects of an economic rebound in South Asia are firming up as growth is set to increase by 7.2 percent in 2021 and 4.4 percent in 2022, climbing from historic lows in 2020 and putting the region on a path to recovery.
But growth is uneven and economic activity well below pre-COVID-19 estimates, as many businesses need to make up for lost revenue and millions of workers, most of them in the informal sector, still reel from job losses, falling incomes, worsening inequalities, and human capital deficits, says the World Bank in its twice-a-year-regional update, it added.
Also read: WB projects 1.6 pc GDP growth for Bangladesh in 2020-21
The latest South Asia Economic Focus South Asia Vaccinates shows that the region is set to regain its historical growth rate by 2022.
Electricity consumption and mobility data is a clear indication of recovering economic activity.
The outlook for Bangladesh, Nepal, and Pakistan has also been revised upward, supported by better than expected remittance inflows: Bangladesh’s gross domestic product (GDP) is expected to increase by 3.6 percent in 2021; Nepal’s GDP is projected to grow by 2.7 percent in the fiscal year 2021-22 and recover to 5.1 percent by 2023; Pakistan’s growth is expected to reach 1.3 percent in 2021, slightly above previous projections.
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The improved economic outlook reflects South Asian countries’ efforts to keep their COVID-19 caseload under control and swiftly roll out vaccine campaigns.
Governments’ decisions to transition from widespread lockdowns to more targeted interventions, accommodating monetary policies and fiscal stimuli—through targeted cash transfers and employment compensation programs—have also propped up recovery, the report notes.
“We are encouraged to see clear signs of an economic rebound in South Asia, but the pandemic is not yet under control and the recovery remains fragile, calling for vigilance,” said Hartwig Schafer, World Bank Vice President for the South Asia Region.
He said that Going forward, South Asian countries need to ramp up their vaccination programs and invest their scarce resources wisely to set a foundation for a more inclusive and resilient future.
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While laying bare South Asia’s deep-seated inequalities and vulnerabilities, the pandemic provides an opportunity to chart a path toward a more equitable and robust recovery.
To that end, the report recommends that governments develop universal social insurance to protect informal workers, increase regional cooperation, and lift customs restrictions on key staples to prevent sudden spikes in food prices.
South Asia, which grapples with high stunting rates among children and accounts for more than half of the world’s student dropouts due to COVID-19, needs to ramp up investments in human capital to help new generations grow up healthy and become productive workers.
Noting that South Asia’s public spending on healthcare is the lowest in the world, the report also suggests that countries further invest in preventive care, finance health research, and scale up their health infrastructure, including for mass and quick production of vaccines.
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“The health and economic benefits from vaccinations greatly exceed the costs involved in purchasing and distributing vaccines for all South Asian countries,” said Hans Timmer, World Bank Chief Economist for the South Asia Region.
He also said that South Asia has stepped up to vaccinate its people, but its healthcare capacity is limited as the region only spends 2% of its GDP on healthcare, lagging any other region.
"The main challenge ahead is to reprioritize limited resources and mobilize more revenue to reach the entire population and achieve full recovery.
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WB okays $250 million for Bangladesh to respond to COVID-19 pandemic
World Bank has approved $250 million to help Bangladesh create more and inclusive jobs and effectively respond to the COVID-19 pandemic for a faster recovery and stronger resilience to future crises.
The Third Programmatic Jobs Development Policy Credit—the last in a series of three credits— is supporting the government of Bangladesh to develop a stronger policy and institutional framework to modernize the trade and investment regime; improve social protection for workers; and help youth, women and vulnerable population access quality jobs, according to a release from World Bank.
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It will also support informal micro-entrepreneurs in recovering from the shock by extending micro-finance facilities.
Overall, it will support government programs to protect over 5 million jobs as part of the government’s near-term response to the crisis, while laying the groundwork to accelerate recovery and build resilience.
This program will also help streamline business and investment services, reducing the cost of starting a business. Further, it supports reforms to align the skills development sector with labor-market demands.
Also read: World Bank prediction on Bangladesh economy inconsistent: Finance Minister
“Job creation remains central to Bangladesh’s development objectives. While Bangladesh has had strong economic growth in recent years, the pace of job creation has slowed, especially in the manufacturing sector. The COVID-19 pandemic increased the challenges, and the poor and women were hardest hit,” World Bank Country Director for Bangladesh and Bhutan Mercy Tembon said.
She said that this financing will help Bangladesh create more and better jobs and expand support for both formal and informal workers affected by COVID-19 crisis.
Read WB approves $200 million to help Dhaka support urban poor, migrants
This financing will support the government in its efforts to protect the earnings of workers affected by the COVID-19 crisis and enable firms to continue paying their workers’ wages.
“Although income and job losses due to the pandemic impacted people from all walks of life, women are most at risk of exiting the job market,” World Bank Lead Economist and Task Team Leader for the Project Aline Coudouel said.
He said that this series of programs promoted quality daycare for children in a bid to bring more women to the job market and supported actions to create a more inclusive labor market, for women, youth, and migrants.
Also read: COVID-19 might leave adverse impact on Indian economy: World Bank report
With this program, the total World Bank’s financing to the Programmatic Jobs Development Policy Credit series stands at $750 million.
The credit is from the World Bank’s International Development Association (IDA), which provides concessional financing, has a 30-year term, including a five-year grace period. Bangladesh currently has the largest ongoing IDA program totaling over $14 billion.
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