IMF Cuts Growth Forecasts Amid Persistent Inflation
Bangladesh’s economy could grow more slowly than those of other South Asian countries, while inflationary pressure is likely to remain the highest in the region, predicts the International Monetary Fund (IMF).
According to a report published in this newspaper yesterday, the country’s economy is heading towards its weakest growth in nearly four decades, with the IMF projecting gross domestic product (GDP) growth of just 3.2 percent in the current fiscal year, while average annual inflation could reach 10.9 percent.
Consequently, the sluggish growth will put further pressure on investment and employment, while high inflation will erode people’s purchasing power.
The World Bank has also recently reported that around eight million people had fallen below the poverty line over the past four years.
Last month, the ADB also forecast growth of 4 percent. However, the IMF’s projection is lower than both the WB and ADB. The government, however, has set a growth target of 6.5 per cent for the current fiscal year.
Meanwhile, Bangladesh Bank, while announcing a new monetary policy, said that inflationary pressures have not yet fully subsided, rather compounded by rising fuel prices, the impact of implementing a new pay structure, and global economic uncertainty.
Against this backdrop, the central bank has kept the policy interest rate unchanged at 9.50 percent for the October-December quarter of the 2026-27 fiscal year. This decision indicates that controlling inflation remains its primary concern.
Amidst this situation, the hike in fuel prices has sparked fresh concerns, as rising fuel costs drive up production and transportation expenses.
This impacts the prices of goods and services, potentially hindering the ongoing process of curbing inflation.
Fuel prices in the global market could rise further, particularly if the conflict in the Middle East drags on and supply chains through the Strait of Hormuz are disrupted.
As Bangladesh is heavily dependent on imports, its economy would also feel the strain. The new pay structure is another significant factor contributing to inflation.
An increase in wages will boost people’s purchasing power. If production and supply fail to keep pace with that rising demand, inflation will increase. Therefore, alongside raising wages, it is crucial to strengthen production and supply systems.
In this situation, relying solely on monetary policy will not suffice. Alongside controlling inflation, production must be increased, energy supplies must be ensured, and the investment climate improved.
Discipline needs to be restored in the banking sector, and efficiency in public spending enhanced. Most importantly, every decision must be based on data and ground realities.
