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Budget for upcoming fiscal year 2024-25

Global economic rebound to drive up BD goods’ demand

Hopes underpin outlook

SYFUL ISLAM | June 03, 2024 12:00:00

Hopes underpin new budget outlook as the government eyes a boost in Bangladeshi goods on the international market in the upcoming fiscal year on gradual global economic rebound.

Also, as the economic conditions in major economies like Euro Zone and the United States showing potential of becoming well compared to the previous year, the government expects a rebound in both import and export in the next year.

However, finance officials involved in the budget preparation do not discount downside risks stemming from the high policy interest rates in the large economies, depreciation of currencies, and balance-of-payments pressures on macroeconomic stability of many countries.

Bangladesh's economy is also undergoing such volatile situation as may -- like many other countries -- generate further uncertainty as fallout from geopolitical conflicts, commodity-price volatility, and impacts of climate change, the finance officials predict.

The crafting of the new fiscal budget is at the final stage and will be placed before parliament Thursday (June 6).

Budget officials referring to forecasts of the World Trade Organisation (WTO) have said as the growth in global goods trade, in terms of volume, may increase 2.6 per cent in 2024 and 3.3 per cent in 2025, the overall inflation will decrease and demands for goods will increase under impact of reflation in the coming year.

The export growth may increase 4.0 per cent in the rising and developing economies, and Bangladesh may be able to grab a slice of the bigger trade cake, they predict.

A senior finance ministry official who is involved in budget preparation mentions that some long-term targets have been set in the 8th Five Year Plan and in the second Perspective Plan 2021-2041.These include attaining higher growth, poverty alleviation, raising investments, export growth and diversification, and quality infrastructure development.

The targets of the UN-designated sustainable development goals (SDGs) have been inlaid in the 8th Five Year Plan and in the second Perspective Plan 2021-2041, he says.

The official mentions that global economic volatility of last couple of years has put significant impacts on Bangladesh's economic development. The government has set a target to turn Bangladesh into an upper-middle income country by 2031 and a developed country by 2041.

"However, disruptions from the pandemic, Russia-Ukraine war, and the ongoing geopolitical tensions may delay achieving these targets," says the high official of the ministry of finance.

Finance officials think the targets can be achieved in time provided the ongoing global financial uncertainty remains within tolerable limits.

In this case, they say, rapid industrialisation, export diversification, adoption of artificial intelligence, and automation may help in getting to the goals.

Ahsan H Mansur, Executive Director, Policy Research Institute of Bangladesh is, however, "cautiously optimistic" about achieving various economic targets, including the higher export growth, in the coming fiscal.

"We have both macroeconomic instability and structural problems, and these need to be overcome to attain the targets," he told the FE.

The economist suggests further rise in policy interest rate and lessening liquidity support to banks to reduce macroeconomic instability to some extent.

Regarding structural problems, Mr Mansur says there are problems in revenue mobilisation, in bank governance etc which are fundamental problems and they need to be quelled.

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