The World Bank has predicted a decline in Bangladesh’s Gross Domestic Product (GDP) growth for the current fiscal year, following a similar forecast by the International Monetary Fund (IMF). According to a report by the World Bank, GDP growth is expected to drop to 4.1% in the 2024-25 fiscal year. In June, the organization had forecasted a 5.7% growth rate for Bangladesh.
On Friday, the World Bank published its “Global Economic Prospects” report, which presented this revised GDP growth forecast. The report highlighted that economic activities in Bangladesh have been disrupted due to political instability since mid-2023, resulting in decreased investor confidence. This situation, coupled with policy uncertainties, has led to a downward revision of the economic growth forecast.
The weakening economic momentum is attributed to supply constraints, including an energy shortage and restrictions on imports. Inflation has risen significantly in Bangladesh, reducing people’s purchasing power and affecting growth in the services sector.
While inflation has declined in most South Asian countries, it remains high in Bangladesh. To curb inflation, monetary policies have been tightened further. However, inflation may exceed its target in Bangladesh this year. Additionally, foreign currency reserves have declined in Bangladesh and the Maldives, even as other South Asian countries experienced an increase last year.
The report also noted that reduced economic growth in key trade partners like the United States and European countries, along with weakening domestic demand, could impact Bangladesh’s exports. The United States remains the largest single-country export destination for Bangladesh, while nearly half of the country’s total exports go to Europe.
Last month, Bangladesh’s interim government revised its GDP growth target down to 5.25%. On December 2, during a virtual meeting of the Financial, Monetary, and Exchange Rate Coordination Council, chaired by Economic Adviser Dr. Salehuddin Ahmed, it was decided to lower the growth target.