Bangladesh Bank Revised GDP Growth Projection for FY 2023-24

For the fiscal year 2023-24, the Bangladesh Bank has issued a revised GDP growth forecast of 6.5%. Despite being in line with the completion of major projects and robust activities in key sectors, this projection is noticeably more cautious compared to the government’s ambitious target of 7.5%. While it aligns with the Asian Development Bank’s estimate in September, it falls below assessments made by global entities such as the World Bank, the International Monetary Fund, Fitch, and Moody’s.

The Bangladesh Bank reportedly attributes the anticipated growth to the successful execution of major projects, continued advancements in the industrial and services sectors, and a favorable outlook for agricultural output. Despite these positive indicators, the central bank remains cautious in its projections.

In terms of inflation, the central bank’s reportedly estimates indicate a point-to-point inflation of 8% by January 2024, with a subsequent decrease to 6% by June 2024. These figures result from comprehensive measures undertaken by the Bangladesh Bank and the government, including policy rate hikes and the removal of caps on lending and deposit rates to align with market forces.

Additional strategies to curb inflation involve refraining from printing money for government lending and tightening import regulations.

Addressing foreign exchange reserves, the Bangladesh Bank reports that the country’s forex reserves, based on the IMF’s BPM-6, are currently standing at nearly $20 billion, equivalent to four months’ worth of import bills. The central bank expresses optimism about achieving stability in exchange rates and overall reserve positions, contingent on the US Federal Reserve’s monetary policy decisions.

While noting an improvement in the current account balance, which has shifted to a $1 billion surplus compared to last year’s $3.3 billion deficit, challenges persist in the negative financial account, impacting the overall balance of payments.

In response to these economic challenges, the Bangladesh Bank and the government are collaboratively implementing measures. The central bank is hopeful that increased exports and remittances, coupled with eased inflation, will materialize as the global economic situation improves. With national elections scheduled for January, the central bank anticipates an economic upturn towards the end of the fiscal year, signaling a dynamic period for Bangladesh’s economic landscape.

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