World Bank has retained economic growth projection at 7 per cent for Bangladesh for the current fiscal year (2018-2019) although the new finance minister hoped that the rate would reach near 8.5 per cent.
The multilateral lending agency made the projection in its flagship report ‘Global Economic Prospects: Darkening Skies’ released on Wednesday.
Earlier, in October 2018, WB in its Bangladesh Development Update forecast that growth in gross domestic product of the country would be 7 per cent in the fiscal year, falling from 7.86 per cent in FY18.
‘GDP growth is forecast at 7 per cent in FY 2019 and is expected to decelerate only slightly over the forecast horizon,’ WB said in the latest report.
The newly appointed finance minister, AHM Mustafa Kamal, after taking office on Monday said that the GDP growth in FY19 would reach close to 8.5 per cent.
‘As per an international think-tank, Bangladesh’s GDP growth will reach 7.5 per cent in this year. They actually predict in a conservative way. I think the GDP growth will reach near 8.5 per cent,’ he said while talking to reporters without naming the think-tank.
WB in its report, however, said that robust economic activity was expected to be sustained in Bangladesh.
Activity will be supported by strong private consumption and investment on the back of infrastructure projects, it observed.
Net exports are projected to contribute negatively to GDP growth as imports outpace exports in response to strong domestic demand, the WB pointed out.
It, however, said external vulnerabilities are rising, reflected in mounting external debt, widening current account deficits, and eroding foreign reserves in South Asian countries, especially in Bangladesh and Pakistan.
On the domestic front, vulnerabilities are being exacerbated by fiscal slippages and rising inflation, and there is a risk of delays in structural reforms to address balance sheet issues in the banking and non-financial corporate sectors.
Key external risks include a further deterioration in current accounts and a faster-than-expected global financial tightening, it said.
In South Asia, growth is projected to accelerate to 7.1 per cent in 2019 and this mainly reflects strengthening domestic demand in India as the benefits of structural reforms such as GST harmonisation and bank recapitalisation take effect, the report said.
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