WB says GDP is expected to grow by 6.4% instead of its previous forecast of 5.1%
Bangladesh's gross domestic product (GDP) is expected to grow by 6.4% in the 2021-22 fiscal year (FY), says the World Bank, revising it up by 1.3 percentage points from its previous forecast.
The multilateral lending agency said in June that GDP would grow by 5.1% in the current fiscal.
"Bangladesh's growth rates would pick up to 6.4% in the 2021-22 FY as exports and consumption continue to improve. The government, however, has set a 7.2% growth target for the current fiscal year," it said on Thursday in the latest update of the World Bank's South Asia Economic Focus, titled "Shifting Gears: Digitization and Services-Led Development".
“The forecast is based on the lower base, meaning that the projection for 2020-21 was also lower.
“In the first three months of the current 2021-22 FY, export earnings have increased and the economy is recovering from the loss of the second wave of the pandemic,” said Professor Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD).
He also said that every sector is in the process of turning around from the situation caused by the pandemic. So, it can be said that the early signs are still positive.
“However, our GDP growth will depend on private sector investment. The investment in this sector is still recovering,” he added.
“We have not yet reached the projection of Bangladesh Bank's credit growth. However, 6.4% GDP growth is possible because there are still nine months left.”
“This growth is possible if investment in the private sector increases significantly during this period and if the credit growth target is achieved successfully,” he added.
According to the World Bank, the South Asian region’s economy is expected to grow by 7.1% in 2021 and 2022.
"While the region's year-on-year growth remains strong, albeit, from a low starting point in 2020, the recovery has been unequal across nations and sectors. South Asia's average annual growth rate is expected to be 3.4% from 2020 to 2023, down three percentage points from the four years prior to the pandemic,” it said.
The World Bank said India's GDP is expected to grow by 8.3% in 2021-22 FY, aided by an increase in public investment and incentives to boost manufacturing.
As tourism numbers recover, the Maldives' GDP is expected to grow by 22.3% in 2021.
"The pandemic has had a significant economic impact on South Asia. Much will rely on the rate of vaccination, the likely emergence of new Covid-19 strains, and any big slowdown in global growth in the future," said Hartwig Schafer, World Bank vice president for the South Asia Region.
"While short-term recovery is critical, policymakers should also take advantage of this chance to address long-standing issues and seek a green, resilient, and inclusive growth path."
Covid-19 has left long-term scars on the region's economy, with the effects lasting well into the recovery, according to the global lender.
Hartwig Schafer, vice-president of the World Bank South Asia Region, said that the pandemic has had profound impacts on South Asia's economy.
“Going forward, much will depend on the speed of vaccination, the possible emergence of new Covid-19 variants, as well as any major slowdown in the momentum of global growth,” he added.
Meanwhile, many countries saw decreased investment, supply chain interruptions, and human capital buildup setbacks, as well as significant debt increases. In 2021, the pandemic is expected to have caused 48 to 59 million individuals in South Asia to become or remain impoverished, the world bank said in the report.
“Countries in South Asia have a strong comparative advantage in exporting services, particularly business processes and tourism,” said Hans Timmer, World Bank chief economist for the South Asia Region.
The countries, however, have struggled to break into manufacturing export markets, he said before adding: “The region needs to rethink regulations and establish new institutions to foster innovation and competitiveness in order to fulfil the potential of services-led development.”