The Bangladesh Bank believes that the country’s GDP (gross domestic product) growth for FY25 may witness a decline due to the July-August uprising, floods, and implementation of reform agendas.
Making the forecast in its latest report titled “Bangladesh Bank Quarterly” published on Thursday, the central bank stated, “Looking forward, GDP growth in the coming quarter may witness some slowdown due to the people’s uprising during July and August 2024, and flooding in some parts of the country during August and September 2024.
“Nonetheless, the new interim government has a mandate of initiating and implementing comprehensive reform measures, including economic reforms, towards achieving macroeconomic stability and ensuring governance in the financial sector.”
The Asian Development Bank (ADB) has slashed its economic growth forecast for Bangladesh to 5.1 per cent for FY25, citing political unrest, supply chain disruptions, and recent severe floods in parts of the country.
For FY25, the now fallen Hasina regime had set a GDP growth target to 6.8 per cent, a recovery from 5.82 per cent estimated by the Bangladesh Bureau of Statistics (BBS) for FY24.
Inflation remained a major concern for Bangladesh, mentions the central bank report. However, the regulator remains in favour of measures to tackle inflation.
“To tackle the inflation, the central bank may maintain its contractionary monetary policy stance until there are clear signs of inflation easing,” the report adds.
Bangladesh saw highest inflationary pressure – 11.66 per cent – this July. it later slightly declined to 10.49 per cent in August as the Hasina regime fell. During September, the figure further dropped to 9.92 per cent.
Meanwhile, the central bank expressed optimism that the balance of payment will improve in the coming days.
It further stated, “Robust inflows of remittances, along with substantial foreign assistance from several multilateral organisations and development partners are anticipated, which may help to improve the balance of payments situation.
“Despite the intensified deficit in trade balance and current account balance, the BoP returned to a surplus of $455 million in Q4FY24 from a deficit of $1.3 billion in Q3FY24, largely driven by a substantial surplus in the financial account.”
It should be noted that the central bank and interim government are actively working to rein in inflation while supporting productive economic sectors, although the economy faces various macroeconomic uncertainties.
Looking ahead to FY25, expectations for continued economic growth are high, supported by improved internal and external macroeconomic conditions. Furthermore, the implementation of financial and fiscal reforms is likely to stimulate Bangladesh’s economic growth further.