The World Bank (WB) has projected a relatively slower GDP growth to persist in FY25 at 5.7% in Bangladesh, driven by a modest recovery in private consumption supported by a moderation in inflation.
“Persistent inflation is expected to weigh on private consumption growth, and shortages of energy and imported inputs combined with rising interest rates and financial sector vulnerabilities are expected to dampen investor sentiment,” said the Washington-based lender in its Bangladesh Development Update released today (2 April).
It also said Bangladesh’s real GDP growth is projected to remain relatively subdued at 5.6% in FY24, compared to the average annual growth rate of 6.6% over the decade preceding the Covid-19 pandemic.
“Investment recovery will need support from improved implementation of large public investment projects. On the supply side, this will be reflected in higher industrial growth, even though services growth is expected to remain subdued,” says the report.
Growth is expected to increase gradually over the medium term as monetary, exchange rate, financial and structural reforms are implemented.
The World Bank report said, “Even though political uncertainty has diminished with a new cabinet taking oath after the national elections held in January 2024, downside risks to the outlook are significant.
“Inadequate progress in monetary and exchange rate reforms may result in a further decline in foreign exchange reserves and persistent inflationary pressure,” it added.
“Tighter liquidity conditions could exacerbate vulnerabilities in the banking sector. Fiscal risks include a revenue shortfall, potential financial sector fiscal liabilities, and deficit monetisation,” said the World Bank report.
