Bangladesh economy is likely to grow at a healthy rate of 6.8 per cent in the current fiscal propelled by a gradual recovery from the impact of the Covid-19 pandemic, said the Asian Development Bank (ADB).
The Manila-based lender made the prediction in its flagship publication ‘Asian Development Outlook (ADO) 2020’ released on Tuesday.ADB says the country’s recovery will be supported by a strong manufacturing base and strengthening of growth in export destinations.
“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.
“Recent economic performance in exports and remittances, and government’s macroeconomic management including securing foreign funds for economic stimulus and social protection have made this recovery feasible,” he added.
Inflation is expected to moderate to 5.5 per cent and current account deficit to narrow to 1.1 per cent of GDP in FY2021, according to ADB projection.
Prudent macroeconomic management and speedy implementation of the government stimulus measures are key imperatives to ensure the projected recovery.
The main risk to this growth projection is a prolonged pandemic in Bangladesh or its export destinations, the lender 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.
Inflation is expected to stay at 5.5 per cent in FY2021 reflecting a good crop outlook and favourable international commodity prices.
Consumer caution and underutilized production capacity should mitigate any upward pressure on prices from the government’s fiscal and monetary stimulus measures.
“We are encouraged by the increase in exports and remittances, and hope the recovery will be sustained, which will help in achieving the projected growth rate,” Parkash said, adding that early access to vaccine and continued emphasis on health pandemic management can help sustain this recovery.
“This crisis is an opportunity to undertake further reforms in resource mobilization, export diversification, employment generation, skills development, as well as social protection; and ADB is working with the government in these areas to provide further support,” he assured. ADB has already provided initial assistance of $600 million in loans and $4.4 million in grants for managing socio-economic impacts of the COVID-19 pandemic and supporting quick recovery. ADB has programmed $5.9 billion firm and $5.2 billion standby assistance for Bangladesh in 2021-2023.
In its 47-year-long partnership with Bangladesh, ADB has mobilized over $36.6 billion in loans and grants, including co-financing, to help bring better infrastructure, public services, and social development outcomes to the people of Bangladesh. ADB’s current sovereign portfolio in Bangladesh has 49 projects with around $11 billion.