IMF forecasts 5.5% growth of Bangladesh for FY23

BTJ Desk Report
IMF forecasts 5.5% growth of Bangladesh for FY23

The International Monetary Fund has kept its economic growth forecast for Bangladesh unchanged, which it set at 5.5% for the current fiscal year in January.

However, the latest outlook is 0.5%age points lower than the prediction the IMF made six months earlier.

The global outlook report by the IMF, released on Tuesday, also forecast no change in Bangladesh’s GDP growth in FY24, which is predicted to be 6.5%.

The global lender had forecast 6% growth for the current fiscal year in its October 2022 report.

In its Bangladesh country report, published in January during the approval of $4.7 billion loans to help the country avert an economic crisis, the IMF said global headwinds are expected to weigh on the near-term outlook, and inflation is set to remain elevated.

Average headline inflation in FY23 was expected to increase to 8.9%, driven by rising domestic food and fuel prices and the pass-through of large taka depreciation, the IMF had said in that report and warned high inflation, while adding to economic uncertainty, would reduce consumer spending.

In the latest report, the IMF said consumer prices will slow slightly to 8.6% in FY23 and further to 6.5% in FY24.

The country report predicted the current account deficit is expected to improve to 3.2% of GDP in FY23 from 4.1% the previous fiscal year, given strict import control.

The April outlook by the IMF says Bangladesh’s current account deficit will improve further to 2.1% of GDP in the ongoing fiscal year before widening again to 4.2% of GDP in FY24.

Earlier in April, the World Bank predicted Bangladesh’s real GDP growth will decelerate to 5.2% in FY23 due to rising inflation, tighter financial conditions, disruptive import restrictions, and global economic uncertainty. In FY24, growth is expected to pick up to 6.2%.

The Asian Development Bank said Bangladesh’s gross domestic product is expected to grow by 5.3% in the 2023 fiscal year. The slower growth forecast reflects subdued domestic demand and weaker export expansion due to slow global growth following the Russian invasion of Ukraine, according to the ADB’s report.


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