BD economy may grow slower at 5.9pc next fiscal year

Bangladesh economy may grow at a 5.9-percent rate in the upcoming fiscal year, says Hong Kong and Shanghai Banking Corporation (HSBC) Limited and forecasts a pickup in FY2025-26.

The economy could rebound in the FY2026 and is expected to grow at 6.3 per cent, says the HSBC Economic Outlook unveiled recently in Dhaka.

"The average incremental GDP in the next four years in Bangladesh will be over US$60 billion which is more than the predicted incremental GDP of many other Asian peers," said Frederic Neumann, Chief Asia Economist and Co-Head of Global Research Asia, HSBC.

Meanwhile, the Bangladesh government is going to set a GDP growth target at 6.75 per cent for the upcoming FY2025.

Mr Frederic was presenting the key features of the report at a discussion meeting on "HSBC Economic Outlook: A Perspective of Bangladesh", held on May 12 in Dhaka, said a press release.

Mr Frederic said the acceleration in growth should be supported by household spending and improving purchasing power amid easing inflation pressures.

During the keynote presentation, Frederic Neumann stressed the need for Bangladesh to capitalise on the flow of FDI (foreign direct investment) as there is possibility of high FDI flow into Asia.

"Remittances are expected to rebound as well, driven by an improving global outlook, helping to further support consumption," he added.

Investment spending, too, is expected to pick up, led by exporters who are benefitting from the improving global trade cycle, the HSBC economists said.

Mr Frederic at the discussion meeting presented a Global Economic Policy Uncertainty Index that graphically represented the global uncertainties over the years.

The index peaking during the pandemic posed multifaceted challenges which Bangladesh overcame with resilience.

"Despite these headwinds, the outlook for Bangladesh remains bright, with growth expected to improve further as fiscal and structural reforms gain traction," Mr Frederic told the meet.

The HSBC economist said: "Bangladesh is well positioned to thrive in the coming years, building on its growing competitiveness, especially for ready-made garments."

Meanwhile, easing inflation pressures should support household spending, giving the economy an extra boost, he noted.

Salman F Rahman, Private Industry and Investment Adviser to the Prime Minister, attended the meet as chief guest.

Dr Rubana Huq, Managing Director, Mohammadi Group and Vice-chancellor of Asian University for Women, and Zaved Akhtar, Chairman and Managing Director, Unilever Bangladesh and President, Foreign Investors' Chamber of Commerce and Industry (FICCI), were the key speakers at the event.

Also present were Md Mahbub ur Rahman, Chief Executive Officer, HSBC Bangladesh, and Gerard Haughey, Country Head of Wholesale Banking, HSBC Bangladesh.

Over 200 clients and stakeholders, representatives from embassies, regulators and government officials also attended the event.

During the panel discussion, Salman Rahman said, "Despite doing well internally, economic repercussions arising out of external factors have posed challenges for the country, including declining forex reserves and the appreciation of the dollar against the taka.

"We need to focus on domestic revenue mobilisation, modernising the tax-collection system with wider tax net and, diversification of exports."

HSBC CEO Mr Mahbub ur Rahman said: "As the world economy is on a gradual recovery, in Bangladesh, empowered by our skilled workforce, fueled by the surge in domestic demand, and buoyed by the rebounding remittances, our trajectory towards progress remains unwavering."

The panel discussion acknowledged the challenges for Bangladesh while highlighting positive developments and areas of opportunity, HSBC claimed.