BMI forecasts steady growth in BD this fiscal

JASIM UDDIN HAROON | Published: March 18, 2024 23:03:36

Fitch Solutions Company BMI predicts that the economic growth in Bangladesh is likely to remain steady in the current fiscal.
"We hold our short-term forecast for economic growth in Bangladesh steady, as we expect the country's real GDP to grow by 5.4 per cent y-o-y in FY2023/24," it says.
The BMI in its latest analysis of Bangladesh forecasts that private consumption will continue to be low, as high inflation undermines people's purchasing power.
It, however, said stronger remittances inflows would likely to provide some relief for households.
"A weak local taka or BDT, a shortage of foreign currency, high-interest rates, capital goods import restrictions and fiscal con solidation will weigh on gross capital formation."
The risk of a weaker taka poses downside risks to our economic growth forecast as the outbreak of the Israel-Hamas war and the associated geopolitical risk premia is set to ensure that oil prices remain volatile in the short term, it notes.
Greater policy certainty and lower risk of unrest following the January 2024 elections will lend some support to foreign direct investment, it said.
"In the short term, exports will continue to contribute positively to economic growth beyond the historic trend prior to the Covid-19 pandemic."
Fiscal consolidation will limit public infrastructure investment and thereby add to the pressures on gross fixed capital formation.
Consumption will be dragged down by muted private consumption, as high inflation undermines households' purchasing power.
The report said net exports are a bright spot, as Bangladesh's trade deficit has decreased over recent months and stands at a low, even compared to pre-pandemic levels.
"An increase in energy prices as the Israel-Hamas war poses a key downside risk to our outlook."
This report from the BMI (Business Monitor International) Country Risk and Industry Research is a product of Fitch Solutions Group.
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