Bangladesh’s economy is showing signs of early recovery and its gross domestic product (GDP) is expected to grow by 6.8 percent in 2021 fiscal year, the latest Asian Development Bank (ADB) report says.
Asian Development Outlook (ADO) 2020 Update was released on Tuesday, reports UNB.
The growth reflects gradual recovery, supported by a strong manufacturing base and strengthening of growth in export destinations. Inflation is expected to remain moderate to 5.5 percent and current account deficit to narrow to 1.1 percent of GDP in FY2021, an ADB news release said.
ADB said prudent macroeconomic management and speedy implementation of government’s stimulus measures are key imperatives to ensure the projected recovery but noted that the main risk to this growth projection is a prolonged coronavirus (Covid-19) pandemic in Bangladesh or its export destinations.
“Bangladesh economy has started recovering from the pandemic. Despite significant pressure on the health and pandemic management systems, the government has managed the economy well with appropriate economic stimulus and social protection measures, ensuring basic services and commodities for the poor and vulnerable,” said Country Director Manmohan Parkash.
‘Crisis an opportunity’
He said the recent economic performance in exports and remittances, and government’s macroeconomic management including securing foreign funds for economic stimulus and social protection have made this recovery feasible.
“We’re encouraged by the increase in exports and remittances, and hope the recovery will be sustained, which will help in achieving the projected growth rate,” Parkash said, adding that early access to vaccine and continued emphasis on health pandemic management can help sustain this recovery.
“This crisis is an opportunity to undertake further reforms in resource mobilisation, export diversification, employment generation, skills development, as well as social protection; and ADB is working with the government in these areas to provide further support.”
ADB has already provided initial assistance of $600 million in loans and $4.4 million in grants for managing socio-economic impacts of the Covid-19 pandemic and supporting quick recovery. ADB has programmed $5.9 billion firm and $5.2 billion standby assistance for Bangladesh in 2021-2023.
In FY2021, the government’s fiscal and monetary stimulus measures are expected to boost public and private investment. The central bank’s expansionary and accommodative monetary policy is expected to aid the projected growth while keeping inflation contained. Strong remittances will stimulate private consumption, ADB said.
Inflation is expected to stay at 5.5 percent in FY2021, reflecting a good crop outlook and favourable international commodity prices. Consumer caution and underutilised production capacity should mitigate any upward pressure on prices from the government’s fiscal and monetary stimulus measures.