ADB Country Director in Bangladesh Manmahon Parkash addressing the launching ceremony of Asian Development Outlook (ADO) 2018 Update in Dhaka on Wednesday The Asian Development Bank (ADB) has said Bangladesh's economy is expected to advance by 7.5 per cent during the current fiscal year, powered by private consumption.
The forecast is slightly lower than the government target of 7.8 per cent.
"Private consumption is likely to remain buoyant as remittances continue to recover," the Asian lender said after launching its Asian Development Outlook (ADO) 2018 Update on Wednesday in Dhaka.
"Growth in public investment is expected to ease but remain another key growth driver, and private investment may step up slightly as the central bank reaches out to small enterprises and agriculture," it said.
Asked about the possible impact of the upcoming national election on the economy, ADB country director in Bangladesh Manmahon Parkash said, "If a participatory poll takes place amid the current sound economic base, the election may not impact the economy."
Although Bangladesh's macro-economy is on the solid base, it needs to enhance its private investments particularly in the infrastructure development for the higher GDP (Gross Domestic Product) growth momentum, he said.
ADB senior economist Soon Chan Hong and principal country specialist Jyotsana Verma made a PowerPoint presentation on the report and the overall operations of the ADB in Bangladesh.
The report said exports are expected to expand at a steady pace despite somewhat slower growth in Bangladesh's main trade partners.
Agriculture growth in fiscal year (FY) 2018-19 is expected to be at 2.9 per cent, taking into account the high base set in FY2018, the report said
The report said industrial growth is projected to be at 11.5 per cent as private consumption remains strong and exports expand.
Expansion in services, at 6.2 per cent, will "mirror trends in agriculture and industry," the report noted.
About the inflation, the ADB report said at 6.3 per cent in FY2019, unchanged from the ADO 2018 projection, with higher global fuel prices, currency depreciation, and upward adjustments to natural gas and electricity prices.
Asked whether Bangladesh could attain 8.0 per cent GDP growth, Mr Parkash said: "Yes, it is indeed possible. Bangladesh has already a very strong macroeconomic foundation and it is getting closer to it (growth)."
But he added, "It means you also need to continue prudent macroeconomic policies, good debt management and investing in human capital and new technologies."
Bangladesh economy is in a good shape and its growth momentum is likely to continue, he said, adding it has recorded over 7.0 per cent GDP growth for the last three consecutive years, reaching close to 8.0 per cent now.
Mr Parkash said the ADB would continue to provide both financial and technical support to Bangladesh in these areas.
"In terms of getting to 8.0 per cent growth, it is possible. But, definitely you need to continue with the same kind of policies and same kind of environment. Again, the ease of doing business needs to be really supported much more, so you can attract higher FDI (foreign direct investment) and higher private investment," Mr Parkash said.
Besides, the export performance is expected to remain steady although expansion in import is likely to be slower, he said.
On the supply side, strong industrial growth is likely to continue and contribute to the stable growth, he added.
About the Bangladesh's current account balance, the ADB projected that sharply slowing import growth will moderate the widening of the trade deficit to 23.8 per cent in FY2019 from 92.8 per cent a year earlier.
Remittances are forecast to strengthen by 16.0 per cent to $17.4 billion on top of the large improvement in FY2018.
Against continued sizeable deficits in services and primary income, larger remittances are expected to shrink the current account deficit slightly to $10.8 billion, or 3.5 per cent of GDP.
While the current account deficit relative to GDP is expected to decline slightly in FY2019, its absolute size of over $10 billion is new to Bangladesh, the ADB report said.
When asked about the US-China cold war on trade and its impact on Bangladesh, ADB Bangladesh chief said, "I don't think that Bangladesh will be affected. Rather Bangladesh can tap the benefit."
"Bangladesh has a strong base in its garment, leather and IT industries. It can use these sectors for attracting more investments from across the world," he said.
ADB has a current portfolio of US$ 9.5 billion to support physical and social infrastructures and human resources development in Bangladesh.
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