World Bank Projects 5.7% Economic Growth for Bangladesh in FY252 min read

The World Bank has forecasted that Bangladesh’s economy will grow by 5.7% in the fiscal year 2025, attributing this growth to increased private consumption from easing inflation and a boost in overall investment due to the implementation of large-scale projects. This projection was detailed in the World Bank’s Global Economic Prospects report released on Tuesday.

The report anticipates that shortages of inputs and imported goods will gradually ease. Additionally, a more flexible exchange rate policy is expected to increase remittance inflows and reduce pressures on the balance of payments. This forecast follows the government’s budget projection of a 6.75% GDP growth for FY25, highlighting a nearly one percentage point difference between the World Bank’s and the government’s estimates. The World Bank had previously predicted the 5.7% growth rate for Bangladesh in April and has maintained this projection in its latest report.

For FY24, which ends this June, the World Bank expects the economy to expand by 5.6%. In contrast, the Bangladesh Bureau of Statistics (BBS) provisionally estimates a slightly higher GDP growth of 5.82% for the same period. The World Bank’s report points out that industrial activity in Bangladesh has been disrupted by ongoing import restrictions, leading to shortages of materials and intermediate goods. Despite these challenges, government consumption and investment have supported economic activity. However, elevated inflation has dampened real wage growth and household purchasing power, negatively impacting private consumption. Furthermore, higher borrowing costs and high levels of non-performing loans in the banking sector have weighed on demand and investor confidence.

Globally, the World Bank has raised its growth outlook due to resilient consumer spending in the United States. It now expects the world economy to grow by 2.6% this year in real terms, a 0.2 percentage point increase from its January update. Despite this optimistic adjustment, the World Bank cautions that global growth remains weak by historical standards. This comprehensive economic analysis provides a nuanced perspective on Bangladesh’s growth trajectory amidst a complex global economic landscape.

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