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Bangladesh growth loftier than expected

Dev partners predict country’s brighter economic future

Published : 20 Sep 2023 10:21 PM

The economic growth of Bangladesh is estimated higher than the forecast for fiscal 2023. This is reflected in improvement in domestic demand and better export growth due to economic recovery in the euro area, the latest Asian Development Bank (ADB) report said.

Development partners including World Bank and Asian Development Bank have continued to laud Bangladesh’s tremendous economic growth and its positive trajectory for an even brighter economic future, experts said.

Despite formidable challenges, Bangladesh's phenomenal development has drawn the international community's attention and researchers have been amazed at the   country’s spectacular progress, braving natural disasters, political troubles and governance challenges.

However, the development partners have become trusted partners for assisting Bangladesh in its development. They remain committed to supporting Bangladesh in building infrastructure and improving social services and governance for faster economic growth and poverty reduction.

They are committed to continuing and deepening partnership to help Bangladesh use its full potential and create a brighter future.

For the past fifty years, they have partnered with the governments and the people of Bangladesh by providing money as per the demand to tackle issues like public health, education, energy, environment, food security, natural disasters, and more for developing the nation, economists said.

Meanwhile, the World Bank was among the first development partners to support Bangladesh. Since independence, the World Bank has committed about $40 billion in grants, interest-free and concessional credits to the country. Currently, Bangladesh has the largest IDA program in the world with a total of $16.06 billion commitment to 55 ongoing projects.

On the other hand, in its 50-year partnership with Bangladesh, ADB has mobilized over $50 billion in loans and grants, including cofinancing to improve infrastructure, public services, and social development for the people of Bangladesh. ADB’s current sovereign portfolio in Bangladesh has 53projects worth about $13.0 billion.

On Wednesday, the World Bank approved $102 million to help Bangladesh improve riverbank protection and navigability in the Jamuna River, saving people from being displaced, protecting their livelihood, and boosting economic activities.

“The project will be the major first multi-sectoral investment under the Bangladesh Delta Plan 2100,” said Ahmed Shawky, World Bank Senior Water Resources Management Specialist and Team Leader for the Project. “The pilot activities will help improve climate resilience while protecting the environment and will not interfere with the river’s natural course. Success and lessons learned from this phase will inform about the design and scope of the subsequent projects.”

“Jamuna is one of the largest and most dynamic rivers in the world. It provides a lifeline to millions of people. Yet, river erosion, aggravated by climate change and rising water levels, displaces thousands of people every year, pushing them to poverty,” said Abdoulaye Seck, World Bank Country Director for Bangladesh and Bhutan. “Sustainable and climate resilient management of the Jamuna River will bring enormous economic benefits for the country and its people. The World Bank is helping Bangladesh to develop and implement a multi-phased program to protect sections of riverbanks and improve navigation channels and we will continue working closely with our multilateral and bilateral development partners.”

Bangladesh’s gross domestic product (GDP) is expected to grow by 6.5 percent in fiscal year (FY) 2024, compared with an estimated growth of 6.0 percent in FY 2023, according to Asian Development Outlook (ADO) September 2023. 

Inflation is projected to ease from 9.0 percent in FY2023 to 6.6 percent in FY2024. The current account deficit is expected to slightly narrow from 0.7 percent of GDP in FY2023 to 0.5 percent of GDP in FY2024 as remittance growth improves. The main risk to this growth projection is a further deterioration in export growth if global demand is weaker than expected.

“The government is managing relatively well against the external economic uncertainties, while advancing infrastructure development and critical reforms to improve investment climate,” said ADB Country Director Edimon Ginting. “These key structural reforms include strengthening public financial management, enhance domestic resource mobilization, improvement of logistics, and deepening financial sector, which are critical for private sector development, export diversification and productive job creation in the medium term,” said Mr. Ginting. Continued high oil prices also provides a good incentive to accelerate reforms to expand domestic renewable energy supply and achieve the country’s climate change goals.” 

The ADO September 2023 states that moderate inflation and an increase in remittances will contribute to reviving private consumption, while the completion of a number of major government infrastructure projects will increase investment. Private investment, however, may be dampened by the initial higher interest rates following the enhancement in the country’s monetary policy framework.

Inflation is expected to ease from 9.0 percent in FY2023 to 6.6 percent in FY2024 with some fall in global nonfuel commodity prices, expected higher agricultural production, and the initial tightening of monetary policy under the new framework.