FY24 GDP growth revised down to 4.22%
Bangladesh previously recorded GDP growth of 3.45% in FY20 during the Covid-19 pandemic
Bangladesh's GDP for the fiscal 2023-24 grew by 4.22%, 1.6 percentage points lower than its initial estimate of 5.82% made in May last year, according to the Bangladesh Bureau of Statistics (BBS).
The latest revision by the BBS was formally presented to the chief adviser today (9 February), Chief Adviser's Press Secretary Shafiqul Alam told The Business Standard after press conference at the chief adviser's official residence Jamuna.
The finance ministry in a presentation to Chief Adviser Professor Muhammad Yunus on the day warned that weaknesses in the financial sector and labour unrest could pose short-term risks for the interim government.
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"In addition to inflation, restoring discipline in the financial sector and addressing labour unrest before it escalates should be top priorities for the interim government," reads the finance ministry report.
Finance Adviser Salehuddin Ahmed on the day presented the report titled "Bangladesh's Economy: Recent Challenges and Future Actions" to Yunus, outlining the current economic situation, government measures, and recommended actions.
Meanwhile, as a result of the revised GDP, per capita income stood at $2,738 in FY24, down from the preliminary estimate of $2,784.
The finance ministry report stated that reducing the inflation rate below 10% was a major challenge, which has now been achieved. By June, inflation is expected to fall to 8%, and if it drops below 6.5% in the future, the government will consider reducing subsidies by raising gas and electricity prices.
While efforts to control inflation through monetary and fiscal policies have been made, existing flaws in the supply system continue to undermine these measures, said the report.
"To address this, the government will deploy special mobile courts at the divisional and district levels for the next month as a demonstration effect," reads the report.
Additionally, all types of warehouses for daily necessities, including cold storage facilities, will be placed under strict supervision, it added.
The report stated that to reduce arrears in the power sector, the subsidy has been increased from Tk40,000 crore to Tk62,000 crore in the revised budget for the current fiscal year.
Measures have been taken to control subsidies by lowering production costs without raising electricity prices for consumers, resulting in projected savings of Tk11,444 crore – about 10% of the sector's total expenditure, it added.
The finance adviser informed the chief adviser that steps are underway to renegotiate electricity purchase prices in existing contracts and implement energy audits to reduce production costs to a reasonable level.
The report also outlines plans for a new bidding round for deep-sea oil and gas exploration contracts and aims to lower electricity production costs by shifting from oil-based to gas-based fuel.
The report states that at least 10 banks are facing severe risks due to financial sector mismanagement under the previous government.
It recommends a rapid asset quality review to assess the banks' actual conditions and, if necessary, implement mergers and acquisitions to mitigate risks.
This would require enacting relevant laws and regulations, including a bank resolution ordinance.
Additionally, the report emphasises the need to strengthen international efforts to bring money launderers to justice and continue the Bangladesh Bank's LC monitoring to prevent trade-based money laundering.
The finance ministry emphasised improving the investment environment by drawing on the experiences of Thailand and Vietnam.
It recommended consulting foreign investors to identify and address existing challenges.
Regarding industrial sector challenges, the report highlighted the ongoing unrest involving around 40,000 Beximco Group employees, with road blockades, vandalism, and arson affecting nearby factories.
It noted that factories owned by individuals facing corruption or money laundering charges – many of whom are absconding or abroad – are either shut down or struggling to pay salaries, fuelling worker dissatisfaction.
The report also warned that vested interests are aggravating the situation, leading to deteriorating law and order, worker unrest in industrial areas, and student protests in educational institutions.
