Bank & Insurance

Bangladesh continues strong recovery from pandemic: ADB

Published : 22 Sep 2021 09:20 PM

Bangladesh's gross domestic product (GDP) is expected to grow by 6.8 percent in current fiscal year (FY22), an Asian Development Bank (ADB) report said.

The report titled "Asian Development Outlook (ADO) 2021 Update" released on Wednesday said the growth projection reflects a strong recovery supported by strengthening manufacturing, continued expansion in the global economy and effective government recovery policies.

Inflation is expected to slightly edge up to 5.8 percent and current account deficit to narrow to 0.6 percent of GDP in FY2022. However, FY2022 growth is expected to remain below pre-pandemic levels.

The main risk is re-escalation of coronavirus disease (COVID-19) infection rates in Bangladesh or major advanced economies, clipping domestic and external demand, the report said.

"The Government's policies for saving lives while protecting livelihoods underpinned the recovery process in Bangladesh, making it one of the few countries in the world sustaining commendable economic growth in recent difficult times," said Country Director Manmohan Parkash.

"Prudent macroeconomic management, and efficient implementation of stimulus measures and social protection programs have helped. Continued efforts for job creation, quick vaccination, and improving domestic resource mobilization will further accelerate the recovery process," he added.

Appreciating recent initiatives in the areas of financial inclusion, and expanding social protection, Parkash added, "Sustained reforms to increase business competitiveness, foreign investment, export diversification, skills development, and technology adoption will stimulate private sector investments and hasten economic recovery".

In FY2022, improving consumer confidence and the government's fiscal and monetary stimulus measures are expected to boost private and public investment.

The central bank's expansionary and accommodative monetary policy is expected to support the projected growth while keeping inflation contained, the report added.

Strong remittances will stimulate private consumption.

Inflation is expected to edge up to 5.8 percent in FY2022 reflecting recovery in economic activity.

 Continued implementation of the increased fiscal and monetary stimulus measures is expected to create inflationary pressures.

A good crop outlook, consumer caution and underutilized production capacity should mitigate any upward pressure on prices. Domestic administered prices for fuel may cushion the impact of increased crude oil prices.

ADB has reoriented its program priorities in Bangladesh emphasizing health and social protection, skills and rural development, water and sanitation, and the finance sector since the onset of the COVID-19 pandemic in early 2020.

Projects, programs, and technical assistance worth over $1.8 billion have been approved for social protection, job creation, vaccine procurement, and emergency management of the COVID-19 pandemic.

In its 48-year-long partnership with Bangladesh, ADB has mobilized over $44 billion in loans and grants, including cofinancing, to help bring better infrastructure, public services, and social development outcomes to the people of Bangladesh.

ADB's current sovereign portfolio in Bangladesh has 51 projects with around $12 billion.