The World Bank predicted that economic growth in Bangladesh would decline to 4 per cent in the current financial year due to recent flood and uncertainty in the production sector.
The Washington-based lender in April forecasted growth of 5.7 per cent in Bangladesh for FY 2024-25 starting from July 1.
The World Bank’s South Asia Development Update, published on Thursday, said that Bangladesh’s growth would slow down to between 3.2 per cent and 5.2 per cent. The intermediate point would be 4 per cent.
The global lender expected weak growth in investment, and industry and moderate growth in agriculture due to recent floods.
In the budget of the current financial year, the previous government had set a target of achieving a growth of 6.75 per cent. 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 financial year 2019-20, Bangladesh had a growth of 3.45 per cent.
Besides reducing the forecast for the current financial year, the World Bank has also slashed the growth estimate for the last financial year 2023-24 to 5.2 per cent. The government’s provisional growth estimate for the last financial year was 5.82 per cent.
In the report, the World Bank said that its forecasts reflected the lack of reliable data in recent months and the uncertainty surrounding the political and economic outlook.
In the short-term, political uncertainty would not boost investment and growth in the industrial sector. On the other hand, agricultural production would be slightly affected due to floods, said the outlook.
The World Bank, however, 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 programmes 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.