With election-related worries behind, the International Monetary Fund (IMF) believes some of Bangladesh's economic indicators including inflation will begin showing positive signs, signalling a global rebound.
"Now the election is behind us, the uncertainty has dissipated, we expect the financial account will get back into a more resilient one," said Krishna Srinivasan, director for the Asia and Pacific Department of the IMF at a press conference in Tokyo on the Regional Economic Outlook.
Replying to a question as to whether Bangladesh was on track as regards IMF's string-attached lending package, he answered in the affirmative.
"Broadly speaking, yes," Srinivasan said, about an IMF team's review of Bangladesh's program of action two months back.
"The review was satisfactory in terms of the meeting of various, what we call, conditionality in the program," he said, adding that there were some areas where the country couldn't meet the requirements, particularly on the external side, and that's partly because of the run-up to the election.
On the macroeconomic front, he said the financial account was in the negative territory while the current account was doing reasonably well because of surging exports and import compression.
Srinivasan pointed out three reasons behind upgrading the regional growth forecast for 2024 to 4.5%, from 4.2% last October.
First, part of the positive dynamic from last year carries over into 2024.
Second, a more supportive external environment, notably robust growth in the US, reinforces domestic resilience. Demand for technology, electronics, and optical products has picked up in recent months, which benefits economies such as Korea and Singapore.
And coming third is the fact that countries like China and Thailand have announced sizable policy stimulus.
Overall, Asia is on track to deliver again two-thirds to global growth in 2024, as it did in 2023.
However, he says as a footnote, even though the outlook has improved, important risks also remain.
A larger and more drawn-out correction in China's property sector could curtail domestic demand further, especially if accompanied by stress in local government finances. It would also reduce demand for the region's exports.
Moreover, the financial conditions are still volatile. Tighter-than-expected conditions in the United States or Asia could put pressure on heavily indebted industries and economies.
And, rising risks of geopolitical fragmentation are particularly onerous for Asia, given the region's deep integration into global trade. "We already see evidence of negative effects in the form of longer and less efficient supply chains. The threat of higher shipping costs reinforces risks to trade."
