In a recent forecast by the Mastercard Economic Institute (MEI), Bangladesh is expected to experience a decline in both GDP growth and inflation in the fiscal year 2025. According to MEI, the country's GDP growth will drop to 5.7%, while inflation, after rising to 9.8% in FY24, is projected to ease to 8% in FY25.
Persistent high inflation has been eroding consumers' purchasing power, adding to the economic challenges caused by weak domestic and external demand. Additionally, higher US dollar rates could exacerbate vulnerabilities in the external sector. MEI suggested a shift towards more market-based rates to address these issues.
David Mann, chief economist for Asia Pacific and Middle East Africa at Mastercard was speaking during a keynote presentation at a roundtable event titled "Global and Bangladesh Outlook & Risks," held at the Sheraton Dhaka hotel on Thursday.
David said that the USA may cut the policy rate several times this year. If this happens, it would be good news for Bangladesh. Bangladesh's remittance income has been rising in recent months, however, the import spending is also rising.
Syed Mohammad Kamal, country manager of Mastercard said: “We are forecasting that inflation will ease down from 9.8% to 8% in FY25. Although the crawling peg exchange rate is well supported, we think it needs to be more market-based.”
“Mastercard is bringing 20% of the total remittance of Bangladesh. As per our experiences, the introduction of the crawling peg exchange rate regime in May, along with greater alignment between official and unofficial exchange rates, are acting as tailwinds for increased remittances,” he also added.
The report stated that the introduction of the crawling peg exchange rate regime in May along with greater alignment between official and unofficial exchange rates are acting as tailwinds for increased remittances, according to MEI.
The MEI has forecast that the central bank may hike the policy rate by 9% in 2025 from 8.5% to tame inflation.
It’s also said that Bangladeshi consumers have doubled their share of wallet spending on essentials compared to the pre-pandemic levels, driven by the rising prices of essentials at the cost of discretionary spending.
Consumer spending on groceries and electronics sees the highest stickiness to digital channels in the post-pandemic period.
Mastercard Economics Institute (MEI), a global research and advisory group that develops innovative measurements and translates economics into results, brought together renowned economists, the country head of development partner organizations; the managing directors, CEOs, deputy managing directors and senior officials of Mastercard’s partner banks and fintech organizations; managing directors and CEOs of local and multinational conglomerates in Bangladesh participated in the event.