Now IMF slashes Bangladesh's economic growth forecast to 4.5%

Infographics: TBS

The International Monetary Fund (IMF) has joined the World Bank and the Asian Development Bank (ADB) in slashing its economic growth forecast for Bangladesh, now projecting a 4.5% growth for the current fiscal year.

This adjustment marks a significant decrease from the IMF's previous estimate of 6.6% made in April and represents the lowest growth rate for Bangladesh in nearly two decades, excluding the pandemic-affected fiscal year of 2019-20.

In its latest World Economic Outlook (WEO) released on Tuesday (22 October), the IMF attributed this grim forecast to persistent inflationary pressures, with expectations that inflation in Bangladesh will remain elevated, climbing to 10.7% in FY25, up from 9.7% a year earlier.

However, the multilateral agency said the global battle against inflation has largely been won, even though price pressures persist in some countries.

Meanwhile, the Bangladesh Bureau of Statistics (BBS) has yet to finalise last year's growth data, currently provisionally reported at 5.82%, while the IMF predicted a slight dip to 5.4% for FY24.

Despite the dismal short-term outlook, the IMF remains cautiously optimistic about the future, projecting that Bangladesh's real gross domestic product (GDP) growth could rebound to 7.7% by FY26, with inflation cooling to 5.6%.

Earlier this month, the World Bank downgraded its outlook for Bangladesh, predicting economic growth of just 4% for FY25, down from an April forecast of 5.7%, citing significant uncertainties around the political and economic outlook following the recent political turmoil.

Last month, the ADB also trimmed its growth outlook for Bangladesh, forecasting the economy to expand by 5.1% in the current fiscal 2024-25, down from its April projection of 6.6%. The revision comes as political unrest in July and August, combined with recent floods, dampened economic activities.

Global growth to remain stable yet underwhelming

The IMF said that global growth is expected to remain stable yet underwhelming. At 3.2% in 2024 and 2025, the growth projection is virtually unchanged from those in both the July 2024 WEO Update and the April 2024 WEO.

Global headline inflation is expected to fall from an annual average of 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies.

"While the global decline in inflation is a major milestone, downside risks are rising and now dominate the outlook: an escalation in regional conflicts, monetary policy remaining tight for too long, a possible resurgence of financial market volatility with adverse effects on sovereign debt markets, a deeper growth slowdown in China, and the continued ratcheting up of protectionist policies," read the report.