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Dhaka Tribune

BMI forecasts steady growth for Bangladesh in FY24

'We hold our short-term forecast for economic growth in Bangladesh steady, as we expect the country's real GDP to grow by 5.4% Y-o-Y in FY24'

Update : 19 Mar 2024, 08:05 PM

Business Monitor International (BMI), a concern of Fitch Solutions Group, predicted that Bangladesh's economic growth was likely to remain steady in the current FY24.

"We hold our short-term forecast for economic growth in Bangladesh steady, as we expect the country's real GDP to grow by 5.4% Y-o-Y in FY24," it also said.

The BMI in its latest analysis of Bangladesh forecasts that private consumption will continue to be low, as high inflation undermines people's purchasing power.

It, however, said stronger remittance inflows would likely provide some relief for households.

"A weak local Taka, a shortage of foreign currency, high-interest rates, capital goods import restrictions and fiscal consolidation will weigh on gross capital formation."

The risk of a weaker taka poses downside risks to our economic growth forecast as the outbreak of the Israel-Hamas war and the associated geopolitical risk is set to ensure that oil prices remain volatile in the short term, it noted.

Greater policy certainty and lower risk of unrest following the January 2024 elections will lend some support to foreign direct investment, it said.

"In the short term, exports will continue to contribute positively to economic growth beyond the historic trend prior to the Covid-19 pandemic."

Fiscal consolidation will limit public infrastructure investment and thereby add to the pressures on gross fixed capital formation.

Consumption will be dragged down by muted private consumption, as high inflation undermines households' purchasing power.

The report said net exports are a bright spot, as Bangladesh's trade deficit has decreased over recent months and stands at a low, even compared to pre-pandemic levels.

"An increase in energy prices as the Israel-Hamas war poses a key downside risk to our outlook."

This report from the BMI's Country Risk and Industry Research is a product of Fitch Solutions Group.

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