6.75 % is an optimistic GDP growth after two lower consecutive years

Bangladesh government is optimistic that the nation’s GDP will grow by 6.75% in the fiscal year 2024-25, nearly a percentage point higher than the current year’s growth. Despite a contractionary monetary budget aimed at controlling inflation, this projection reflects confidence in the economy’s robustness.

Bangladesh Bureau of Statistics (BSS) recently predicted a 5.82% GDP growth for this fiscal year, down from the initially forecasted 7.5%, prompting the finance ministry to revise the target to 6.5%.

To address inflation, Finance Minister Abul Hassan Mahmood Ali presented a Tk 7,97,000 crore national budget for 2024-25 to Parliament today (June 6), after Prime Minister Sheikh Hasina’s approval in May. Notably, this year’s budget increase is under 8%, lower than the usual 10-12% rise, indicating a contractionary approach. This marks the country’s 54th budget.

Minister Ali expressed confidence that prudent policy measures will help achieve a 6.75% GDP growth next fiscal year and 7.25% in the medium term, with inflation expected to drop to 6.5% next year due to these strategies. This budget is the first under Prime Minister Sheikh Hasina’s government since her third consecutive term began earlier this year. Ali highlighted the momentum in GDP growth due to sound policy decisions. From FY2009-10 to 2022-23, the average growth rate was 6.71%, among the highest globally. The country achieved a record 7.88% growth in FY 2018-19, just before the Covid-19 pandemic.

Bangladesh managed growth rates of 7.10%, 5.78%, and 5.82% (provisional) in 2021-22, 2022-23, and 2023-24, respectively. To sustain this growth, the government plans to support agricultural and industrial production, prioritize key infrastructural projects, and boost export earnings and remittances. Loan demand and interest rates will be influenced by credit supply and banker-customer relationships. Measures to control inflation include ensuring successful monetary policy and supportive fiscal policies, with programs like the Family Card and OMS strengthened to protect the public from high inflation’s effects.