Bangladesh economy expected to maintain robust growth in fiscal 2019-20

Source: Xinhua | 2020-04-04

Bangladesh economy is expected to remain strong in fiscal year 2019-20 (July 2019-June 2020), with strong GDP growth rate of 7.8 percent, according to the latest Asian Development Bank (ADB) report "Asian Development Outlook (ADO) 2020", ADB's flagship economic publication.

The report released here Friday forecasts that the gross domestic product (GDP) of Bangladesh is expected to grow by 7.8 percent in the 2019-20 fiscal and 8.0 percent in 2020-2021.

These growth forecasts rest on several assumptions of continued political calmness, maintained consumer and investment confidence, depressed exports and imports in this fiscal and recovery in the next fiscal, expansionary central bank monetary policy, and favorable weather.

The forecasts do not reflect the impact of the COVID-19, said the Manila-based lender.

"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% to 0.4% 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".

"The outlook will be updated as more information becomes available. To cope with and mitigate the impact of the COVID-19, ADB is committed to support and collaborate with Bangladesh," Parkash added.

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-ons could help minimize impact on Bangladesh economy."

During the first 8 months of this fiscal, according to ADB, Bangladesh economy showed strong performance with growing domestic demand, supported by 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; favorable power production, and government's policy support to boost exports, it said.

However, ADO said the COVID-19 pandemic could hamper such trend due to disruptions in export demands, suppressed consumption, and curbed remittances.

In the next fiscal, it said private consumption will continue to drive growth, aided by continued strong remittances.

Private investment will revive on a stronger outlook supported by improvements in business regulatory environment and enforcement of single digit lending rates in banks, it added.

A planned rise in public investment in large projects should help expansion in domestic demand, said the ADO and added improvement in global growth with expected government policy support will help the industrial activities expand.

Inflation will stay in check in both years, and expected to slightly edge up to an average of 5.6 percent in the current 2020 fiscal on higher food prices as well as nonfood prices on account of higher domestic natural gas prices.