WEB DESK
The GDP growth rate of Bangladesh is forecast to decline to 5.2 percent in the Financial Year (FY) 2023, says the World Bank in its latest Global Economic Prospects report for January 2023. It cites rising inflation and its negative impact on household incomes and firms’ input costs, as well as energy shortages, import restrictions, and monetary policy tightening as the reasons for the sharp slowdown from 7.2 percent in FY 2022 to 5.2 percent in FY 2023. However, the growth rate is forecast to rise to 6.2 percent in FY 2024.
The latest forecast of the World Bank negatively revises its own forecast of June 2022 for Bangladesh GDP growth rate by 1.5 percent. For the current FY 2022, the WB revised its estimate of June 2022 upwards by 0.8 percent pegging it at 7.2 percent.
The World Bank says that Bangladesh was hit hard by the spillovers from the changing global environment. It was priced out of global energy markets and unable to meet the energy needs of households and businesses. The rising cost of imports doubled the trade deficit since 2019. The deficit could have been even larger had it not been for robust growth in demand for its ready-made garments and a growing share of the global market, says the WB report.
Since early June, the Bangladeshi taka has depreciated by 18 percent and foreign exchange reserves have declined by USD 8 billion, pushing inflation to 8.7 percent. The combination of limited foreign exchange buffers and widening external current account deficits encouraged several countries like Bangladesh and Pakistan to approach the International Monetary Fund (IMF) for help in bolstering foreign exchange reserves and mitigating external financing pressures.