The World Bank has predicted economic growth in Bangladesh will decrease to 4 per cent in the current financial year (FY24-25) due to recent flood and uncertainty in the production sector.
The Washington-based lender in April forecast growth of 5.7 per cent in Bangladesh for FY-24-25 starting from July 1.
The World Bank’s South Asia Development Update published on Thursday said that Bangladesh’s growth will slow down to between 3.2 per cent and 5.2 per cent. According to the World Bank, the intermediate point would be 4 per cent.
The global lender expects weak growth in investment, and industry and moderate growth in agriculture due to recent floods.
In the budget of the current fiscal year, the previous government had set a target of achieving a growth of 6.75 percent. As such, the World Bank’s forecast is significantly lower than the target. If the economic growth in Bangladesh falls as per the World Bank forecast, it will be the slowest growth since the Covid-19 pandemic.
During the Covid pandemic in the fiscal year 2019-20, Bangladesh had a growth of 3.45 per cent.
Besides reducing the forecast for the current fiscal year, the World Bank has also slashed the growth estimate for the last fiscal year 2023-24 to 5.2 per cent. The government’s provisional growth estimate for the last fiscal year was 5.82 per cent.
In the report, the World Bank said its forecasts reflect the lack of reliable data in recent months and the uncertainty surrounding the political and economic outlook.
In the short-term political uncertainty will not boost investment and growth in the industrial sector. On the other hand, agricultural production will be slightly affected due to floods, said the outlook.
However, the World Bank expects economic growth to increase in the medium to long term. The global lender believes that the growth will increase as a result of the reform programs undertaken by the government in various fields.
In this regard, reforms in the financial sector, measures to increase revenue from internal sources, improvement of the business environment, and strengthening of trade have been specially mentioned by the World Bank.