The gross domestic product (GDP) growth of Bangladesh is expected to slow down to 5.3% in the fiscal year 2023 amid global economic disruption caused by the Russia-Ukraine war, said the Asian Development Bank (ADB) on Tuesday.
ADB also said that the lower consumption during high inflation and low investment caused by austerity measures will slow down growth in the 2022-2023 fiscal year (FY) in their latest report, “Asian Development Outlook, April 2023” at their Dhaka office.
However, GDP growth is expected to rise up to 6.5% in FY24, reflecting stronger demand for ready-made garments in the US and Europe as growth recovers and domestic energy costs ease.
ADB said that inflation is projected to sharply accelerate to 8.7% in FY23 due to substantial upward adjustments to domestic electricity and fuel prices, rising domestic food prices and pass-through from steep currency depreciation.
Moreover, inflation is expected to come down to 6.6% in FY24 as global prices for oil and other commodities ease.
The authorities have also taken steps to keep domestic food prices stable by boosting agricultural production.
Remittances are forecasted to increase by 4% to $21.9 billion in FY23 and then by 7.4% to $23.5 billion in FY24 under a fully market-oriented exchange rate.
ADB also stated that the government’s fiscal targets in the FY23 budget may not be fully achieved.
Edimon Ginting, country director of the ADB made the opening remarks at the ADB event.
He said that as Bangladesh graduates from LDC status in 2026, both the advantages of low-cost labor and preferential market access may fade.
He said that the country will need further reforms to develop quality human capital by expanding public expenditure to match the skills of higher education.
Moreover, widening industry and academic collaboration can play a critical role in such an effort.
ADB stated that Asia’s outlook is brighter amid ongoing challenges due to the reopening of China.
The growth in the region is forecasted to be picked up from 4.2% in 2022 to 4.8% in both 2023 and 2024 and the inflation is forecasted to be 4.4% in 2022, 4.2% in 2023, and 3.3% in 2024.