Monday, May 20, 2024


Dhaka Tribune

UN: Bangladesh’s inflation comes down to 6.8%

Bangladesh’s real GDP growth is expected to slow in 2024

Update : 10 Jan 2024, 10:43 PM

Consumer Price Inflation (CPI) in Bangladesh is expected to decrease from 9.6% to 6.8%, according to the latest report by the United Nations (UN). Despite this, the UN notes that real GDP growth is expected to decelerate in 2024. 

The report highlights that in South Asia, inflation is projected to ease to 9.2% in 2024, down from an estimated 13.4% in 2023, attributed to softened domestic demand, stabilized international commodity prices and a reduction in local currency depreciations.

The UN report further predicts that by 2025, inflation in Bangladesh will further decrease to 5.5%. The flagship economic report, titled "World Economic Situation and Prospects (WESP) 2024," also forecasts a slowdown in real GDP growth in Bangladesh for 2024, while economic growth in Nepal is expected to improve.

According to the UN's projections, real GDP growth in Bangladesh is anticipated to decrease to 5.6% in 2024, compared to the partially estimated 6% growth from the previous year. The report suggests a growth rebound to 5.8% in 2025. 

Despite the government's initial target of a 7.5% GDP growth in the FY24 national budget, it has been revised downward to 6.5%.

In October 2023, the World Bank, in its report titled "Bangladesh Development Update- New Frontiers in Poverty Reduction," stated that Bangladesh's economy might experience a slower growth pace of 5.6% in the current FY24 compared to the previous fiscal year. This slowdown is attributed to economic challenges such as high inflation, external payment pressure, financial sector vulnerabilities, and overall uncertainty.

Not only the World Bank, in December 2023 Asian Development Bank (ADB) also cut the growth forecast for Bangladesh's economy to 6.2% for FY24. 

In September, ADBs projection was 6.5%.

Before the ADB, the International Monetary Fund (IMF) in October, 2023 lowered the economic growth projection for Bangladesh to 6% for the current fiscal year, down from an earlier projection of 6.5%.

The UN report stated that growth in South Asia is projected to remain robust at 5.2% in 2024, slightly lower than the 5.3% growth estimated for 2023. However, the effects of higher interest rates will continue to weigh on investment, and weaker global demand will lead to slower export growth. 

Economic growth in India is projected to remain strong at 6.2% in 2024, following an estimated expansion of 6.3% in 2023, mainly supported by resilient private consumption and strong public investment.

Regarding regional inflation, it said, regional headline inflation is projected to ease to 9.2% in 2024 from an estimated 13.4% in 2023 as domestic demand softens, international commodity prices stabilize, and local currency depreciations ease.

The Monetary policy tightening report said that after raising policy rates during 2022, most central banks in South Asia paused monetary tightening or started lowering their key policy rates in 2023, with a few exceptions.

The Bangladesh Bank raised the policy interest rate by 75 basis points to 7.25% in October, reflecting a continuation of the monetary policy tightening cycle that began in mid-2022.

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