a year ago

Bangladesh likely to outshine two Asian giant economies

IMF forecast on BD, China, India for next fiscal year shows such prospect 

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Bangladesh may overtake Asia’s two giant economies — India and China — in the next fiscal year in economic growth, the International Monetary Fund (IMF) predicts in its latest evaluation report.

Besides, the country will outgrow the world’s second-largest economy, China, in the current fiscal year with its projected higher Gross Domestic Product (GDP) growth, the global monetary supervisor says.

According to the IMF, Bangladesh’s economy may grow at a 6.5-percent rate in the next fiscal year (FY) 2023-24 while the Chinese economy at 4.5 per cent and India at 6.3 per cent.

Although Bangladesh’s GDP- growth rate is forecast lower than India’s in the current fiscal, it will be higher than China’s in the FY2023.

In the current fiscal, Bangladesh might expand at a rate of 5.5 per cent while China at 5.2 per cent.

The Indian economy will grow at 5.9 per cent in the current fiscal, the IMF said in its ‘Regional Economic Outlook: Asia and the Pacific’ report, released on May 4 in Washington.

However, Bangladesh’s competitor country on the global trade market, Vietnam, is likely to expand at a higher rate than Bangladesh’s.

Vietnam’s economy is projected to grow at 5.8-percent rate in the current FY2023 while at 6.9 per cent in the next FY2024, the IMF predicts.

Meanwhile, the Fund has recently cut Bangladesh’s GDP-growth projection to 5.5 per cent in the current fiscal amid the global and domestic economic shocks.

In October 2022, the Washington-based lender forecast a 6.0-percent GDP growth for Bangladesh in the current fiscal.

The IMF in its latest report said: “In Bangladesh, growth will slow to 5.5 per cent in 2023 because of demand-management measures.

“The recently approved Extended Fund Facility will help address economic challenges caused by Russia’s war in Ukraine, while the concurrent Resilience and Sustainability Facility arrangement will help expand fiscal space to finance climate investment priorities and build resilience against long-term climate risks.”

Also predicted is that across Asia, the increases in public-debt burdens since the onset of the pandemic and the recent rise in interest rates have reduced fiscal space. Fiscal authorities are in the process of unwinding exceptional support provided over the past three years, resulting in significant near-term consolidation for advanced economies, but also some consolidation for emerging markets, except for Bangladesh and Vietnam.

“But in most emerging markets in the region, 2023 fiscal balances will remain well below medium-term debt-stabilizing levels. Moreover, if borrowing costs were to rise faster than currently projected (that is, because of a tightening in financial conditions), a much steeper fiscal adjustment would be required to stabilize debt,” the development-financier says in its suggestion for the dos.

“At the same time, fiscal pressures linked to aging populations, rising inequality, scarring from the pandemic, and increasing climate mitigation and adaptation needs are expected to increase over the coming years. These trends underscore the need for credible and robust fiscal frameworks.” 

The IMF notes that food security is imperative for sustainable growth in Asia as the insecurity increased in 2022 due to supply-chain disruptions and Russia’s war in Ukraine. Natural disasters continue to create food shortages in vulnerable countries.

Reforms stressed, as such, for combating food insecurity include developing robust social safety nets, maintaining open trade to allow food to flow to countries in need, and investing in climate-resilient agriculture.

Meanwhile, another global lender, the World Bank, projected Bangladesh’s GDP growth for the current FY2023 at 5.2 per cent and the ADB at 5.3 per cent.

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