The Bangladesh economy will remain strong in the coming fiscals with a robust GDP growth even the global demand pulls back, according to the Asian Development Bank (ADB).
In its report, the ADB said that Bangladesh economy is expected to remain strong in FY 20 with a 7.8 per cent GDP growth rate.The report forecasts that GDP of Bangladesh is expected to grow by 8 per cent in FY2021, the ADB said in its latest Asian Development Outlook report on Friday.
These growth forecasts rest on assumptions of continued political calm, maintained consumer and investment confidence, depressed exports and imports in FY20 and recovery in FY21, expansionary monetary policy and favourable weather.
The ADB outlook mentioned that developing Asia’s growth will slow to 2.2 per cent in 2020 due to the COVID19 outbreak, but will rebound to 6.2 per cent in 2021.
The growth decline is broad-based, affecting China and India and the rest of developing Asia’s economies, according to the ADB forecast.
For Bangladesh, the report cited that inflation is expected to stay in check, and the current account deficit will narrow further. Achieving higher growth requires reform to better mobilize domestic resources
“Bangladesh economy continued to perform well despite the global economic slowdown. However, there exists a downward risk due to the COVID-19 global pandemic,” said Country Director Manmohan Parkash.ADB’s preliminary estimates indicate that about 0.2 per cent to 0.4 per cent of Bangladesh GDP may be lost due to spillover effects of the global COVID-19 pandemic. If a significant outbreak occurs in Bangladesh, the impact could be more significant, added Manmohan Parkash.
Appreciating the government’s recent interventions, Parkash said addressing cash management challenges and broader resiliency issues due to COVID-19 related shutdowns and economic knock-on could help minimize the impact on Bangladesh economy.
During the first eight months of FY20, Bangladesh economy showed strong performance with growing domestic demand, supported by a substantial increase in workers’ remittances.
Economic activity is expected to accelerate with higher government development spending; higher imports of liquefied natural gas, oil and construction materials; favourable power production, and government’s policy support to boost exports. However, the COVID-19 pandemic could hamper such trend due to disruptions in export demands, suppressed consumption, and curbed remittance.
The ADO 2020 noted that low revenue mobilization continues to be a key challenge for Bangladesh economy. The low revenue to GDP ratio in Bangladesh diminishes the country’s capacity to sustain high economic growth and reduce poverty.
Revenues thus need to be raised significantly through comprehensive tax reforms, by expanding the tax base and making resource mobilization more efficient to support much-needed public expenditure on infrastructure, health and social development, it added.