Bangladesh economy on track to sustained growth

Bangladesh’s gross domestic product (GDP) is expected to grow by 6.9% in fiscal year (FY) 2022, according to the latest Asian Development Bank (ADB) report Asian Development Outlook (ADO) 2022 released today.

The growth forecast reflects rebound in external trade and recovery in domestic economic activities fueled by implementation of stimulus packages and increased remittance.

Inflation is expected to increase to 6.0% in FY2022 from 5.6% in 2021. Current account deficit is likely to widen from 0.9% of GDP in FY 2021 to 2.7% of GDP in FY2022 on increase in imports and decline in remittance growth.

The main risk to this growth projection is higher prices for oil and imports, and the loss of export sales beyond those built in the present forecasts, mainly due to the Russian invasion of Ukraine.

“The ongoing socio-economic recovery need to be accelerated by enhancing domestic resource mobilization, incentivizing the private sector to create products and services, promoting modern green technologies, and fostering knowledge and innovation,” said Country Director Edimon Ginting.

“Building climate resilient infrastructure and services, introducing carbon tax on fossil fuels, and promoting green investments will help to further advance the current policy initiatives for managing climate change for inclusive and sustainable green growth,” Mr. Ginting added.

The ADO 2022 says that private investment will get stronger, reflecting a solid growth in private sector credit and imports of industrial raw materials and capital goods. With large

available funding, public investment will increase to support the implementation of priority large infrastructure projects. Growth in private consumption, however, may be affected by a decline in remittances.

Inflation is expected to reach 6.0% in FY2022 from 5.6% in FY2021 as price pressures are increasing from upward adjustment in domestic administered fuel prices, rising global food and fuel prices, and implementation of stimulus measures.

The ADO 2022 points out that managing climate change is critical to ensure inclusive and environmentally sustainable growth. As part of developing national adaptation plan by the government, a climate risk–informed master plan should be drawn up for each sector and development unit.

Capacity for better accessing and utilizing climate risk analysis needs to be mainstreamed in public financial management decisions across government. Enabling policies are necessary for green investments, the development and adoption of green technologies, and for greening of existing industries.