The Asian Development Bank on Tuesday lowered its GDP growth projection for Bangladesh in the current fiscal year 2020-2021 to 6.8 per cent from its earlier forecast of 7.5 per cent.
The Manila-based international lender revised the projection in its Asian Development Outlook 2020 Update released on the day.
It, however, said that Bangladesh’s economy was showing signs of early recovery.
The revised forecast of the ADB is much higher than the World Bank projection and significantly lower than the government’s target set in the budget.
The World Bank in a report titled Global Economic Prospects June 2020 said that Bangladesh economy would grow only by 1 per cent due to impact of COVID-19 outbreak while the government in the budget for the FY21 set a target of 8.2 per cent gross domestic product growth for the year.
The International Monetary Fund projected GDP growth for Bangladesh at 5.7 per cent for the year.
Earlier in June, the ADB in its ADO projected that Bangladesh GDP growth would be 7.5 per cent in FY21.
As per provisional estimate of the Bangladesh Bureau of Statistics, Bangladesh’s economy grew by 5.24 per cent in the last FY20. The estimate, however, drew huge criticisms from economists and experts who termed it unrealistic and impossible.
According to the ADB report, the growth reflects gradual recovery, supported by a strong manufacturing base and strengthening of growth in export destinations.
Inflation is expected to remain moderate at 5.5 per cent and current account deficit to narrow to 1.1 per cent of GDP in FY2021, the report said.
Prudent macroeconomic management and speedy implementation of government’s stimulus measures are key imperatives to ensure the projected recovery while the main risk to this growth projection is a prolonged COVID-19 outbreak in Bangladesh or its export destinations, it said.
In FY2021, the government’s fiscal and monetary stimulus measures are expected to boost public and private investment.
The central bank’s expansionary and accommodative monetary policy is expected to aid the projected growth while keeping inflation contained.
Strong remittances will stimulate private consumption, the report said.
‘Bangladesh economy has started recovering from the pandemic. Despite significant pressure on the health and pandemic management systems, the government has managed the economy well with appropriate economic stimulus and social protection measures, ensuring basic services and commodities for the poor and vulnerable,’ ADB country director Manmohan Parkash said in a press release.
Recent economic performance in exports and remittances, and the government’s macroeconomic management including securing foreign funds for economic stimulus and social protection have made this recovery feasible,’ he said.
Early access to vaccine and continued emphasis on pandemic management can help sustain this recovery, he said.
He also said that this crisis was an opportunity to undertake further reforms in resource mobilisation, export diversification, employment generation, skills development, as well as social protection.
Inflation is expected to stay at 5.5 per cent in FY2021, reflecting a good crop outlook and favourable international commodity prices.
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