The gross domestic product (GDP) of Bangladesh is expected to grow by 5.3 per cent in fiscal year (FY) 2023, says the latest Asian Development Bank (ADB) report released on Tuesday. In the Asian Development Outlook (ADO) for April 2023, the regional bank also said the slower growth forecast reflects subdued domestic demand and weaker export expansion due to slow global growth following the Russian invasion of Ukraine. Inflation is forecast to accelerate from 6.2 per cent in FY2022 to 8.7 per cent in FY2023. The current account deficit is anticipated to narrow from 4.1 per cent of GDP in FY2022 to 1.6 per cent of GDP in FY2023 as imports loosen and remittances grow.
The main risk to this growth projection is a greater economic slowdown in Bangladesh’s major export destinations driven by global uncertainty over the prolonged political tensions.
“The government is managing relatively well against the impact of external adversities and has embarked on the reform programs as precautionary measures,” said ADB country director for Bangladesh Edimon Ginting.
“Accelerating key reforms during these difficult times would help the country sustain higher growth in the medium term. These reforms include strengthening public financial management and domestic resource mobilization, deepening the financial sector, and enhancing competitiveness to promote the creation of productive jobs in the private sector,” Ginting said.
“This is also a high time for enhancing resilience against the global energy market volatility by creating an enabling environment for rapid expansion of domestic renewable energy supply to reduce dependence on fossil fuels in line with the country’s climate agenda.”
The ADO April 2023 states that private investment growth will be lower because of energy shortages and higher production costs. With a shortfall in revenue collection, austerity measures, and depleting foreign exchange reserves, public investment growth will also be slower.
Inflation is expected to accelerate from 6.2 per cent in FY2022 to 8.7 per cent in FY2023 as price pressures increase due to the upward adjustment of domestic-administered prices for fuel oil, gas, and electricity, and higher global commodity prices.
In its 50-year partnership with Bangladesh, ADB has mobilized over USD 50 billion in loans and grants, including cofinancing, to improve infrastructure, public services, and social development for the country’s people. ADB’s current sovereign portfolio in Bangladesh has 50 projects worth about USD 11.9 billion.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.