'Under sustained global recovery and effective Covid -19 management, GDP growth is expected to further strengthen to 7.2% in FY2022'
Asian Development Bank (ADB) Country Director Manmohan Parkash on Wednesday said the future economic growth of Bangladesh will depend on recovery in domestic economic activities fueled mainly by implementation of stimulus packages, strong inflow of remittances and rebound in global trade amid projected growth in major export destinations.
“The economy was showing signs of recovery with higher remittances, exports and other indicators, but the recent surge in pandemic and the lockdowns are likely to trim our GDP growth projection of 6.8 % for fiscal year 2020-2021 by at least one percentage point,” he said.
He spoke while addressing virtually the launching of the latest Asian Development Bank (ADB) report “Asian Development Outlook (ADO) 2021.”
Manmohan said Bangladesh economy has withstood the impacts of the first wave of Covid-19 pandemic with timely and effective stimulus measures, ensuring basic services and commodities for the poor and vulnerable. “The economy is now going through the second wave of the pandemic and the future growth will depend on how effectively it is managed,”
“Expanding social safety nets, enhancing investments, creating employment, ensuring mass vaccination and improving the health sector are critical actions for achieving the Eighth Five Year Plan goals,” he added.
ADB senior economist at Bangladesh resident mission Soon Chan Hong made a power-point presentation on the report of ADO.
The ADB Country Director said attaining the targets of development and other spending could be challenging as revenue collection in the first eight months of FY 2021 grew by only 5.2% compared to 9.1% growth in the same period a year earlier.
“Concerted efforts are needed for achieving the annual development programme spending and boosting revenue. The outlook is subject to downside risks. Resurgence in Covid-19 cases and delays in availability in the supply of vaccines–both globally and domestically– could undermine the economic growth outlook,” he continued.
Parkash said under sustained global recovery and effective Covid -19 management, GDP growth is expected to further strengthen to 7.2% in FY2022.
The report said despite headwinds from the Covid-19 pandemic, Bangladesh’s GDP growth is forecast higher in FY2021 and FY2022 in line with a projected global economic rebound.
It said the GDP growth in FY21 is expected to moderate from the earlier estimate of 6.8 % to 5.5-6.0 % due to the resurgence of the Covid-19 cases.
When asked about the possible GDP growth, Manmohan said that the second wave of the deadly virus has severely impacted the economy of the country while the economic activities are also down due to the countrywide lockdowns to rein in the infection rate.
He said the earlier estimate of 6.8 % of growth for Bangladesh in FY21 made in March is likely to be impacted by at least one % and it will possibly range between 5.5 to 6 %.
“Actually this will be a very good one as Bangladesh has done quite well…We need to break the cycle of infections and protect the lives of people,” he said adding that the infection rate is coming down gradually.
Asked about ADB’s overall support in Covid-19 response to Bangladesh, Manmohan said the government is in discussion with the ADB for availing US$940 million as loan to procure vaccines and it would be available at any time.
Besides, he informed that $500 million budget support from ADB is under process to expand social protection and promote financial inclusion while another $500 million is under process to strengthen public financial management and enhance access to finance.
Manmohan said as support for immediate and urgent needs, the ADB provided US$500 million budget support to fund immediate expenditures and programmes for expansion of social safety nets and support to industries to protect jobs (with co financing of US$651 million).
Besides, it ensures $100 million loan to support procurement of urgently needed medical equipment and supplies and upgrading of health and testing facilities, US$3 million grant to procure 200,000 RT-PCR test kits, $3.50 lakh grant to bring in urgently needed, life-saving medical supplies and equipment and $1.34 million to support trainees from Skills for Employment Investment Programme.