Bangladesh economy shows early signs of recovery: ADB

22 Sep 2020 1:20 PM
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Bangladesh's gross domestic merchandise (GDP) is expected to grow by 6.8 percent in fiscal year (FY) 2021, in line with the most up-to-date Asian Development Bank (ADB) report 'Asian Development Outlook (ADO) 2020 Update' released today.

The expansion reflects gradual recovery, reinforced by a strong production bottom and strengthening of expansion in export destinations, the report says.

Inflation is likely to moderate to 5.5 percent and current account deficit to narrow to at least one 1.1 percent of GDP in FY2021.

Prudent macroeconomic administration and speedy implementation of the government stimulus measures are key imperatives to guarantee the projected recovery.

The primary risk to this growth projection is an extended pandemic in Bangladesh or its export destinations.

"Bangladesh market has started dealing with the pandemic. Despite significant strain on the health and pandemic management devices, the government has maintained the economy well with appropriate economic stimulus and social security measures, ensuring basic services and commodities for the indegent and vulnerable," said ADB Region Director Manmohan Parkash.

"Recent economic performance found in exports and remittances, and government's macroeconomic operations including securing foreign funds for economical stimulus and social cover have made this restoration feasible," he said.

"We are encouraged by the upsurge in exports and remittances, and wish the restoration will be sustained, which will help in attaining the projected growth fee," said Parkash.

"Early access to vaccine and continued focus on health pandemic management can help sustain this restoration," he added.

"This crisis is an opportunity to undertake additional reforms in learning resource mobilization, export diversification, employment generation, skills development, along with social protection; and ADB is working with the federal government in these areas to supply additional support," he said.

ADB has already provided original 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 offers programmed $5.9 billion firm and $5.2 billion standby assistance for Bangladesh in 2021-2023.

In FY2021, the government's fiscal and financial stimulus measures are anticipated to improve public and individual investment.

The central bank's expansionary and accommodative financial policy is likely to aid the projected growth while keeping inflation contained. Strong remittances will stimulate individual consumption.

Inflation is likely to stay at 5.5 percent in FY2021, reflecting an excellent crop outlook and favorable international commodity prices.

Client caution and underutilised production capacity should mitigate any upward pressure in rates from the government's fiscal and monetary stimulus methods.

In its 47-year-long partnership with Bangladesh, ADB has mobilised over $36.6 billion in loans and grants, including co-financing, to help get better infrastructure, public services, and social production outcomes to the people of Bangladesh.

ADB's recent sovereign portfolio found in Bangladesh has 49 jobs with around $11 billion.