ADB retains 6.5% GDP growth for Bangladesh for FY24

The Asian Development Bank (ADB) has retained its growth projection for Bangladesh's gross domestic product at 6.5% for the current fiscal 2023-24, citing strong domestic demand and favourable trends in fuel and food prices.

This came out in the ADB's latest report titled Asian Development Outlook July 2023, released Wednesday.

The ADB's GDP forecast for Bangladesh remains higher than the World Bank's projection of 6.2% and aligns with the International Monetary Fund's (IMF) estimate of 6.5%. However, it falls short of the government's ambitious target of 7.5% growth.

Explaining its decision to revise up Bangladesh's GDP growth to 6% for the previous fiscal year from the earlier estimate of 5.3%, the ADB report highlights the unexpected decline in imports and a less severe slowdown in export growth. The manufacturing sector played a crucial role in driving growth, with firms benefiting from supportive government policies, it says.

"In Bangladesh, imports fell sharply than expected and export growth slowed less than expected. On the supply side, manufacturing firms of all sizes leveraged supportive government policies to contribute to growth," the report says.

According to the ADB, crop losses to floods, cyclones, and droughts were partly offset by subsidies, incentives, and other measures. Also, the service sector in the country was buoyed by higher warehouse and support activities and health and social services.

On the demand side, growth in public consumption and investment outpaced expectations, the report adds.

The report projects growth for the South Asia region at 5.5% in 2023 and 6.1% in 2024 given balancing developments.

"South Asia is on course to achieve [Asian Development Outlook] April 2023 growth forecasts where downward revisions for Nepal and Pakistan in 2023 were offset by an upward revision for Bangladesh as net exports performed better than expected.

"Growth projections elsewhere in South Asia are largely maintained," the report says.

The 2024 inflation forecast for South Asia, which was kept at 8.1% for 2023, has been revised up markedly to 6.4%.

ADB Chief Economist Albert Park says, "Asia and the Pacific continue to recover from the pandemic at a steady pace. Domestic demand and service activity are driving growth, while many economies are also benefiting from a strong recovery in tourism.

"However, industrial activity and exports remain weak, and the outlook for global growth and demand next year has worsened."

Exports from developing Asia continue to decelerate

The July Outlook 2023 report reveals exports and industrial activity in developing Asia continue to decelerate as global demand slows. Year on year in the year to date, exports from key technology exporters declined sharply, while weaker demand also held down exports from the rest of the region.

The ADB report says consumption and investment are forecast to boost aggregate regional growth to 4.8% in 2023, as earlier forecast, with the projection for 2024 revised down only marginally to 4.7%.