World Bank: Bangladesh's growth to reach 6.9% in FY23
Economists are behind this projection, but they are also sceptical about the rising concerns posed by Omicron
Syed Zakir Hossain/Dhaka Tribune
Tribune Desk
Publish : 12 Jan 2022, 08:54 PMUpdate : 12 Jan 2022, 09:23 PM
Bangladesh is expected to reach 6.4% in fiscal year 2021-22 (FY22) and 6.9% in fiscal year 2022-23 (FY23) due to increasing demand in the local economy and solid export figures of apparel items.
Strong export growth, supported by increased demand for readymade garments, and a rebound in domestic demand—with improving labour income and remittance inflows—supported the recovery, said the leading global lender.
The World Bank made the projection in its “Global Economic Prospects” report.
As per their previous estimate, the GDP growth was 5% in FY21.
Economists are behind this projection, but they are also sceptical about the rising concerns posed by Omicron.
AB Mirza Azizul Islam, economist and former financial adviser to the caretaker government, told Dhaka Tribune: “In this financial year, our government has set a GDP growth target of 7.2%. The World Bank has estimated 6.4% for the current fiscal and 6.9% for the next. I think it is more realistic and quite possible to achieve this target, especially with the way our economy is going now.”
“However, if another wave of Covid-19 comes, then this GDP forecast may also change,” he added.
“Our GDP growth will depend on private sector investment. The investment in this sector is still recovering. However, 6.4% GDP growth is possible. And if the state of the economy is like this, 6.9% GDP is also possible in the next fiscal.” said Prof Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD).
Export earnings have increased and the overall economy is recovering from the loss of the second wave of the pandemic. After the first 6 months of FY22 every sector is in the process of turning around from the situation caused by the pandemic. But now, if there is a new wave of Cavid-19, it can be difficult to achieve, he explained.
The World Bank report said South Asia’s economy rebounded in the second half of the year following a massive second wave of Covid-19 in mid-2021.
The World Bank report says the pandemic, and the emergence of the Omicron variant, could hinder economic activity by requiring additional mobility restrictions and undermining external demand.
It adds that risks to the outlook remain to the downside, while another risk stems from financing conditions.
Further upward price pressures may cause inflation expectations to become unanchored, worsening domestic financing conditions, eroding real incomes, and weakening the financial sector.
The report states that the growth prospects have improved since June 2021, largely because of better prospects in Bangladesh, India, and Pakistan.
Regional growth is expected to accelerate to 7.6% in 2022 as pandemic-related disruptions fade, before slowing to 6% in 2023.
In most economies, monetary and fiscal policy are expected to remain broadly accommodative in 2022, but gradually shift to a focus on fiscal sustainability and anchoring inflation expectations.
Despite the upward revision to growth, output in 2023 is still projected to be almost 8% lower than projected before the pandemic.
Additionally, the pace of per capita income catch-up with advanced economies is expected to slow over the forecast horizon.
In the subregion excluding India, the report said, growth momentum will pick up over the forecast horizon and is expected to expand by 4.4% in fiscal year 2021/22.
According to the World Bank press release, following a strong rebound in 2021, the global economy is entering a pronounced slowdown amid fresh threats from Covid-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies.
Global growth
Global growth is expected to decelerate markedly from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.
The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term.
In addition, a notable deceleration in major economies—including the United States and China—will weigh on external demand in emerging and developing economies.
The world economy is simultaneously facing Covid-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries, said World Bank Group President David Malpass.
The slowdown will coincide with a widening divergence in growth rates between advanced economies and emerging and developing economies. Growth in advanced economies is expected to decline from 5% in 2021 to 3.8% in 2022 and 2.3% in 2023-a pace that, while moderating, will be sufficient to restore output and investment to their pre-pandemic trend in these economies.
In emerging and developing economies, however, growth is expected to drop from 6.3% in 2021 to 4.6% in 2022 and 4.4% in 2023.
By 2023, all advanced economies will have achieved a full output recovery; yet output in emerging and developing economies will remain 4% below its pre-pandemic trend.
The slowdown will coincide with a widening divergence in growth rates between advanced economies and emerging and developing economies.
Meanwhile, rising inflation—which hits low-income workers particularly hard—is constraining monetary policy. Globally and in advanced economies, inflation is running at the highest rates since 2008.
In emerging markets and developing economies, it has reached its highest rate since 2011.
Many emerging and developing economies are withdrawing policy support to contain inflationary pressures—well before the recovery is complete.
World Bank: Bangladesh's growth to reach 6.9% in FY23
Economists are behind this projection, but they are also sceptical about the rising concerns posed by Omicron
Bangladesh is expected to reach 6.4% in fiscal year 2021-22 (FY22) and 6.9% in fiscal year 2022-23 (FY23) due to increasing demand in the local economy and solid export figures of apparel items.
Strong export growth, supported by increased demand for readymade garments, and a rebound in domestic demand—with improving labour income and remittance inflows—supported the recovery, said the leading global lender.
The World Bank made the projection in its “Global Economic Prospects” report.
As per their previous estimate, the GDP growth was 5% in FY21.
Economists are behind this projection, but they are also sceptical about the rising concerns posed by Omicron.
AB Mirza Azizul Islam, economist and former financial adviser to the caretaker government, told Dhaka Tribune: “In this financial year, our government has set a GDP growth target of 7.2%. The World Bank has estimated 6.4% for the current fiscal and 6.9% for the next. I think it is more realistic and quite possible to achieve this target, especially with the way our economy is going now.”
“However, if another wave of Covid-19 comes, then this GDP forecast may also change,” he added.
“Our GDP growth will depend on private sector investment. The investment in this sector is still recovering. However, 6.4% GDP growth is possible. And if the state of the economy is like this, 6.9% GDP is also possible in the next fiscal.” said Prof Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD).
Export earnings have increased and the overall economy is recovering from the loss of the second wave of the pandemic. After the first 6 months of FY22 every sector is in the process of turning around from the situation caused by the pandemic. But now, if there is a new wave of Cavid-19, it can be difficult to achieve, he explained.
The World Bank report said South Asia’s economy rebounded in the second half of the year following a massive second wave of Covid-19 in mid-2021.
The World Bank report says the pandemic, and the emergence of the Omicron variant, could hinder economic activity by requiring additional mobility restrictions and undermining external demand.
It adds that risks to the outlook remain to the downside, while another risk stems from financing conditions.
Further upward price pressures may cause inflation expectations to become unanchored, worsening domestic financing conditions, eroding real incomes, and weakening the financial sector.
The report states that the growth prospects have improved since June 2021, largely because of better prospects in Bangladesh, India, and Pakistan.
Regional growth is expected to accelerate to 7.6% in 2022 as pandemic-related disruptions fade, before slowing to 6% in 2023.
In most economies, monetary and fiscal policy are expected to remain broadly accommodative in 2022, but gradually shift to a focus on fiscal sustainability and anchoring inflation expectations.
Despite the upward revision to growth, output in 2023 is still projected to be almost 8% lower than projected before the pandemic.
Additionally, the pace of per capita income catch-up with advanced economies is expected to slow over the forecast horizon.
In the subregion excluding India, the report said, growth momentum will pick up over the forecast horizon and is expected to expand by 4.4% in fiscal year 2021/22.
According to the World Bank press release, following a strong rebound in 2021, the global economy is entering a pronounced slowdown amid fresh threats from Covid-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies.
Global growth
Global growth is expected to decelerate markedly from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.
The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term.
In addition, a notable deceleration in major economies—including the United States and China—will weigh on external demand in emerging and developing economies.
The world economy is simultaneously facing Covid-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries, said World Bank Group President David Malpass.
The slowdown will coincide with a widening divergence in growth rates between advanced economies and emerging and developing economies. Growth in advanced economies is expected to decline from 5% in 2021 to 3.8% in 2022 and 2.3% in 2023-a pace that, while moderating, will be sufficient to restore output and investment to their pre-pandemic trend in these economies.
In emerging and developing economies, however, growth is expected to drop from 6.3% in 2021 to 4.6% in 2022 and 4.4% in 2023.
By 2023, all advanced economies will have achieved a full output recovery; yet output in emerging and developing economies will remain 4% below its pre-pandemic trend.
The slowdown will coincide with a widening divergence in growth rates between advanced economies and emerging and developing economies.
Meanwhile, rising inflation—which hits low-income workers particularly hard—is constraining monetary policy. Globally and in advanced economies, inflation is running at the highest rates since 2008.
In emerging markets and developing economies, it has reached its highest rate since 2011.
Many emerging and developing economies are withdrawing policy support to contain inflationary pressures—well before the recovery is complete.
Meraj Mavis also contributed to this report
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