IMF trims Bangladesh’s GDP growth forecast for FY24 to 6.0pc

IMF Headquarter. Photo: Collected

IMF Headquarter. Photo: Collected

Bangladesh may see its economic growth decelerate to 6.0 per cent in the current fiscal as per a revised IMF forecast prompted by few more macroeconomic adversities it finds.

The International Monetary Fund (IMF) cites volatile in macroeconomic situation over the last few months in downsizing the country's GDP growth for the fiscal year (FY) 2023-24, as inflation remains steep and reserves keep receding.

In its World Economic Outlook (WEO), released Tuesday, the Fund says gross domestic product or GDP growth in Bangladesh is likely to be down by 0.50-percentage points to 6.0 per cent from its earlier April projection of 6.5 per cent.

Meanwhile, the World Bank in its World Development Outlook report also has lowered the country's growth forecast by 0.60-percentage points to 5.6 per cent from its earlier April projection at 6.2 per cent.

A bit better picture is portrayed by the Asian Development Bangladesh (ADB). In its economic-outlook update in September the Asian bank forecast Bangladesh's economy to grow 6.5 per cent in FY2024.

All the three multilateral development financiers' assessments fall behind government target to achieve a 7.5-percent GDP growth in the current fiscal.

The IMF also has drawn lackluster looks for the world economy as it forecasts the global growth to slow from 3.5 per cent in 2022 to 3.0 per cent in 2023 and 2.9 per cent in 2024--well below the historical (2000-19) average of 3.8 per cent.

Advanced economies are expected to slow from 2.6 per cent in 2022 to 1.5 per cent in 2023 and 1.4 per cent in 2024 as policy tightening in inflation combat starts to bite.

Emerging markets and developing economies are projected to have a modest decline in growth from 4.1 per cent in 2022 to 4.0 per cent in both 2023 and 2024.

On inflation, the global lender, IMF, gives a contrasting trend on global and local scales as it forecasts a lower global inflation but says Bangladeshi consumers to count high consumer prices. It has projected the country's inflation at 7.2 per cent through the current fiscal year.

Global inflation is forecast to decline steadily, from 8.7 per cent in 2022 to 6.9 per cent in 2023 and 5.8 per cent in 2024, due to "tighter monetary policy" aided by lower international commodity prices, the report says.

Currently, Bangladesh's point-to-point inflation has been hovering around 9.0 per cent over the last few months. In the last month of September it was estimated at 9.63 per cent.

The IMF-whose economic-assessment mission is currently here in connection with a string-tied loan package--has suggested that "monetary policy actions and frameworks are the key at the current juncture to keep inflation expectations anchored".

About Bangladesh's current-account balance, the IMF Tuesday said the country's account balance could be in a negative trajectory by 0.8 per cent of the GDP in the current fiscal.

Bangladesh is now struggling with the foreign-exchange-reserve crisis with the depleting remittance and export earnings, higher inflationary pressure, and lower private-sector-credit growth.

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