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Headwinds from multiple fronts may hit Bangladesh economy

World Economic Forum lists inflation, debt, price shocks as three main risks

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Bangladesh's economy is under risk of facing multiple headwinds, mainly from three fronts like inflation, debt crisis and severe commodity-price shocks, says the World Economic Forum (WEF) in its global economic-health check.

Human-made environmental damage and geopolitical contestation of resources are two other risks facing the economy over next two years, the WEF says in its 'Global Risks Report 2023', released recently.

A "global risk" is the possibility of the occurrence of an event or condition which, if it occurs, would negatively impact a significant proportion of global GDP, population or natural resources.

The report presents the list of 32 global risks and definitions adopted in the Global Risks Perception Survey 2022-2023. The WEP framed its report based on findings of the perception survey across the regions.

Meanwhile, the World Bank (WB) Tuesday also forecast a bit bleak picture for Bangladesh' economy as it downgraded the growth projections by 0.9 percentage points, in a revision within three months, to 5.2 per cent.

The Washington-based development financier also indentified inflation as one of the shocks responsible for dampening the GDP growth to 5.2 per cent in FY2023, from earlier projection above 6.1 per cent

The Bank cited the rising inflation and its negative impact on household incomes and firms' input costs as well as energy shortages, import restrictions, and monetary-policy tightening as the growth-decelerator.

Point-to-point inflation in the country is maintaining an uptrend, as it was recorded 8.71 per cent in December, as per Bangladesh Bureau of Statistics (BBS) data.

Managing Director of the WEF Ms Saadia Zahidi in the Global Risk Report 2023 said: "The health and economic aftereffects of the pandemic have quickly spiraled into compounding crises.

"Carbon emissions have climbed, as the post-pandemic global economy fired back up. Food and energy have become weaponized by the war in Ukraine, sending inflation soaring to levels not seen in decades, globalizing a cost-of-living crisis and fueling social unrest."

She also notes that the resulting shift in monetary policy marks the end of an economic era defined by easy access to cheap debt and will have vast ramifications for governments, companies and individuals, widening inequality within and between countries.

Ms Zahidi said as the conflict between Russia and Ukraine approaches one year, economies and societies will not easily rebound from continued shocks.

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