ADB downgrades Bangladesh’s GDP growth to 6.6%
BI Report || BusinessInsider
ADB Country Director Edimon Ginting briefs journalists about the update at the bank’s Bangladesh headquarters on Wednesday. Photo: Collected
The Asian Development Bank (ADB) has downgraded Bangladesh's gross domestic product (GDP) to 6.6 percent from 7.2 percent for the current fiscal year due to slower domestic demand and weaker export prospects.
The ADB forecasted this growth in its latest Asian Development Outlook (ADO) 2022 Update released on Wednesday. Country Director Edimon Ginting briefed journalists about the update at the Bank’s Bangladesh headquarters.
“The moderately lower growth forecast reflects slower domestic demand and weaker export prospects due to slower growth in advanced economies,” said the ADO report.
On the other hand, inflation is projected to rise from 6.2 percent in FY2022 to 6.7 percent in FY2023. The current account deficit is expected to narrow from 4.1 percent of GDP in FY2022 to 3.6 percent of GDP in FY2023 as imports slacken and remittances increase.
“The main risk to this growth projection is a slowdown in exports caused by global uncertainty over the prolonged war in Ukraine,” ADB finds.
Edimon Ginting said the government is navigating the prolonged external economic uncertainties relatively well and has implemented appropriate policies to reduce the external imbalance.
“But turbulent times like these are also a good time to accelerate reforms that would improve the country’s growth prospects in the medium term,” said the country director. These reforms include improving domestic resource mobilisation, deepening the financial market, and enhancing competitiveness to promote the creation of productive jobs in the private sector, Ginting said.
“Uncertainties in the international energy market provide a good momentum to accelerate reforms to achieve the country’s climate change goals and expand domestic renewable energy supply to reduce dependence on fossil fuels,” he said.
The ADO 2022 Update states that private investment growth will be lower due to global uncertainty and energy shortages. With slower revenue growth and higher import costs, public investment growth will also be slower as a result of government austerity measures.
Inflation is expected to accelerate from 6.2 percent in FY2022 to 6.7 percent in FY2023 as price pressures increase due to the upward adjustment of domestic administered prices for all types of fuel and rising global commodity prices.
ADB has already provided $2.5 billion in loans and $7.23 million in grants to Bangladesh to address the socioeconomic impacts of the coronavirus disease (COVID-19) pandemic and support a rapid recovery. For the period 2023–2025, ADB has programmed about $9.5 billion for Bangladesh.