Economy
Inflation in Developing Asia to Approach Pre-Pandemic Levels as Fuel and Food Prices Decline
Asian Development Bank (ADB) reports that the higher estimate of 6% for fiscal 2022-2023 reflects a robust performance in net exports, with imports declining more than anticipated and export growth remaining relatively stable. The manufacturing sector, supported by favorable government policies, played a significant role in driving growth across businesses of all sizes. Although crop losses due to natural disasters persisted, they were partially mitigated through subsidies, incentives, and other measures. The service sector experienced positive growth, primarily attributed to increased activities in warehousing, support services, healthcare, and social services. On the demand side, both public consumption and investment surpassed expectations, contributing to overall economic expansion. ADB maintains a growth forecast of 6.5% for fiscal year 2024, unchanged from the previous estimate.
ADB also maintains its growth projection for developing economies in Asia and the Pacific at 4.8% this year, emphasizing the continued support from robust domestic demand. The region’s inflation is expected to decline further, approaching pre-pandemic levels, as fuel and food prices decrease, according to the Asian Development Outlook (ADO) report released in July 2023. Inflation for developing Asia is anticipated to be 3.6% this year, lower than the April forecast of 4.2%. However, the inflation outlook for 2024 has been revised slightly upward to 3.4% from the previous estimate of 3.3%.
The reopening of the People’s Republic of China (PRC) is playing a significant role in bolstering the region’s growth. The PRC’s economy is projected to grow by 5.0% this year, reflecting unchanged figures from the April forecast, primarily due to strong domestic demand in the services sector. However, the demand for Asia’s exports, particularly electronics and manufactured goods, is slowing down as major advanced economies implement monetary tightening measures, impacting overall economic activity. Consequently, the growth forecast for the region in the following year has been marginally revised downward to 4.7% from the previous estimate of 4.8% in April.
ADB Chief Economist Albert Park acknowledges the steady pace of recovery in Asia and the Pacific from the pandemic. He highlights the driving forces of growth, including domestic demand, robust services activity, and the resurgence of tourism in many economies. However, challenges remain in terms of weak industrial activity and exports. Additionally, the outlook for global growth and demand in the coming year has worsened.
Economy
Vietnam’s National Assembly President Attends Forum in Dhaka for Economic Collaboration with Bangladesh
Vuong Dinh Hue, the President of the Vietnam National Assembly, recently participated in an event held in Dhaka known as the ‘Forum on Policies and Laws to Foster Economic, Trade, and Investment Collaboration between Vietnam and Bangladesh.’ This significant gathering was jointly organized by the Vietnamese Ministry of Industry and Trade, the Ministry of Planning and Investment, the Vietnamese Embassy in Bangladesh, and in cooperation with key entities including the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the Vietnamese Business Association in Bangladesh.
The forum drew the presence of a distinguished high-level delegation from the Vietnamese National Assembly, alongside prominent figures from the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the Dhaka Chamber of Commerce and Industry (DCCI), and a substantial representation from businesses on both sides. Additionally, various ministries from both Vietnam and Bangladesh were represented.
During the forum, three notable business-to-business Memoranda of Understanding (MoUs) were inked. These agreements included collaboration between BMH Vietnam Company and Doreen Group Bangladesh, focusing on investment cooperation, technology transfer, and the advancement of pre-engineered steel production. Another agreement was reached between Bangladesh Vietnam Development Assistance Company and the Bangladesh Pharmaceutical Association, with a specific focus on pharmaceutical exchange. Lastly, Huong Giang Aviation Services and the Bangladesh Tourism Association came together to establish a tourism alliance, marking a significant step in enhancing tourism ties between the two nations.
As part of his official three-day tour, Vuong Dinh Hue visited the state-of-the-art facilities of Beximco Pharma in Tongi, where he received an informative presentation and toured the manufacturing facility.
Prime Minister Sheikh Hasina has reaffirmed her government’s unwavering commitment to implementing the Sustainable Development Goals (SDGs), even in the face of challenges posed by the Covid-19 pandemic, the Ukraine war, and the climate crisis. She made this declaration during a meeting with Helen Clark, Chair of the Partnership for Maternal, Newborn and Child Health (PMNCH), at the United Nations Headquarters.
As part of her commitment to healthcare services accessibility for all citizens, PM Sheikh Hasina mentioned the implementation of the National Health Sector Strategic Plan (2011-2030) and a 27% increase in healthcare sector allocations for the current fiscal year 2023-24.
Helen Clark commended Bangladesh’s exceptional progress in healthcare under Prime Minister Sheikh Hasina’s visionary leadership, citing the nation’s remarkable achievements in reducing maternal and child mortality rates and ensuring universal healthcare services.
Bangladesh’s economy is anticipated to expand by 6.5% in fiscal year 2024, reflecting an improvement in domestic demand and enhanced export growth, as per the recent Asian Development Bank (ADB) report titled “Asian Development Outlook (ADO) September 2023.” This growth projection is slightly higher than the 6.0% recorded in the previous fiscal year, driven by a recovering euro area.
Inflation is predicted to decrease to 6.6% in the current fiscal year, down from 9.0% in FY2023. Additionally, the current account deficit is expected to narrow marginally, from 0.7% of GDP in the previous fiscal year to 0.5% in FY2024, thanks to improved remittance growth.
The report identifies the main risk to this growth projection as a potential deterioration in export growth if global demand remains weaker than anticipated.
ADB Country Director Edimon Ginting commented on the government’s effective management of external economic uncertainties, highlighting ongoing infrastructure development and crucial reforms aimed at enhancing the investment climate. These structural reforms encompass bolstering public financial management, mobilizing domestic resources, optimizing logistics, and deepening the financial sector to foster private sector growth, diversify exports, and create productive employment opportunities in the medium term.
The report also underscores the importance of addressing climate change by expanding domestic renewable energy supply in the context of elevated oil prices.
The revival of private consumption, driven by moderate inflation and increased remittances, coupled with the completion of significant government infrastructure projects boosting investment, is expected to stimulate economic growth. However, the initial uptick in interest rates following adjustments to the country’s monetary policy framework may temper private investment.
Inflation is projected to ease due to lower global non-fuel commodity prices, increased agricultural production, and the initial tightening of monetary policy under the new framework.
