Bangladesh economy to grow by 5.5 to 6pc in FY21

Asian Development Bank (ADB) on Wednesday projected 5.5 to 6 per cent GDP growth for Bangladesh for 2020-21 fiscal year buoyed by the implementation of stimulus packages by the government and global trade recovery.

The forecast was made in ADB’s latest report titled Asian Development Outlook (ADO) 2021 released on Wednesday.

Continued healthy remittance inflow is likely to keep domestic demand buoyant and underpin solid growth in private consumption, the report further reads.

Private investment is expected to pick up as moderate growth in private sector credit improves confidence, while public investment forecast is higher as the government expands capital spending with the start of the Eighth Five-Year Plan, 2021–2025, it added.

“The economy was showing signs of recovery with higher remittances, exports and other indicators, but the recent surge in pandemic and the lockdowns are likely to trim our GDP growth projection of 6.8pc for fiscal year 2020-2021 by at least one percentage point,” said Country Director Manmohan Parkash.

“The government managed the first wave of Covid-19 in 2020 well as the stimulus measures and economic policies have largely been effective,” he continued.

The ongoing pandemic is an opportunity to undertake further reforms in social protection and health sector, improving competitiveness of the private sector, reducing cost of doing business, diversifying exports and developing skills, Parkash said.

As the per the report, future economic growth will depend on recovery in domestic economic activities fueled mainly by implementation of stimulus packages, strong inflow of remittances, and rebound in global trade amid projected growth in major export destinations.

Current account balance is expected to cross into surplus of 0.7pc of GDP in FY2021, contributed by remittance growth.

Meanwhile, the main risk to this growth projection is further surge in Covid-19 cases and delayed availability of vaccines both globally and domestically.

The ADO 2021 says that continued strong remittance inflow is likely to support domestic demand with growth in private consumption.

Remittances from workers overseas increased by 35.1 per cent in the first nine months of 2021 due to the 2 per cent cash incentive offered by the government and reduced documentation requirements.

Private investment is expected to pick up as moderate growth in private sector credit improves confidence, while higher public investment is forecast as the government expands capital spending.