IMF cuts Bangladesh’s GDP growth forecast to 6pc

Staff Reporter :
The International Monetary Fund (IMF) has lowered the economy growth forecast for Bangladesh to 6 per cent for the current financial year of 2023-24.

Earlier in April this year, the IMF had projected a 6.5 per cent economic growth for FY24.

The global lender said that Bangladesh’s economy grew 6 per cent in the immediate fiscal year, according to its World Economic Outlook published yesterday.

However, it also revised its projections for Bangladesh’s growth to 6 percent for FY23 from its previous forecast of 5.5 per cent.

The revised growth forecast by the Washington-based multilateral lender comes a week after the World Bank (WB) lowered Bangladesh’s Gross Domestic Product (GDP) growth projection for fiscal 2023-24 to 5.6 percent amid sustained high inflation and external payment challenges.

The IMF report also included the point of uncertainty ahead of the election as a major risk of the economy, along with stabilization of the external sector dependent on removing distortions in exchange rates and lifting exchange rates.

Failure to address these risks may put the economy under more pressure than the projection, it has stated in the Bangladesh Development Update of the World Bank, titled “New Frontiers in Poverty Reduction”.

The report states that the baseline forecast is for 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.

The projection for global growth remains the same.

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

The IMF, however, has cut its 2023 economic growth forecast for China to 5.0 percent from 5.2 percent.

Emerging markets and developing economies are projected to have a modest decline in growth, according to the IMF report from 4.1 per cent in 2022 to 4.0 per cent in both 2023 and 2024. Global inflation is forecast to decline steadily, from 8.7 percent 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.

Regarding the inflation the report state that the core inflation is generally projected to decline more gradually and inflation is not expected to return to the target until 2025 in most cases.