Bangladesh's inflation rate may rise to 9.80 per cent at the end of June but decline to 8.0 per cent in fiscal year (FY) 2025, forecasts the Mastercard Economics Institute.
It also projects that the country's GDP (gross domestic product) growth, which stands at 5.8 per cent in FY24, will decline to 5.7 per cent year on year for FY25.
These were stated at a roundtable discussion with the theme of 'Global & Bangladesh Outlook & Risks' hosted by the global tech company in Dhaka on Thursday.
For FY25, the GDP growth target has been set at 6.8 per cent, signalling a recovery from the provisional estimate of 5.8 per cent for the revised budget FY24.
On the other hand, the inflation target has been set at 6.5 per cent for FY25.
While presenting a keynote, David Mann, chief economist for Asia-Pacific and MEI, said: "Persistently high inflation is weighing on consumers' purchasing power."
Sustained dollar appreciation could further exacerbate economic instability, he cautioned, saying that the country's economy continues to grapple with challenges due to weak domestic and external demand.
Mr Mann also discussed the macro-economic environment globally and specifically in South Asia and Bangladesh.
He elaborated on concepts such as growth prospects, inflation trends, interest rates, foreign exchange volatility, export capability, remittance flow, and developments in savings and credit markets.
Furthermore, the MEI economist emphasised the changing consumer spending patterns due to necessary and discretionary goods, alongside experiences in e-commerce and luxury travel.
Regarding Bangladesh's reserves, he discussed the macro-economic environment globally and specifically in South Asia and Bangladesh.
The reserves have begun to increase again due to rising remittances, he added.
Mr Mann highlighted the need for increased stability of the dollar rate for economic development, further laying stress on e-commerce and a cashless society.
Speaking as the chief guest, former Bangladesh Bank governor Dr Atiur Rahman said: "Sri Lanka's three crucial decisions to control economic instability include political commitment, strong monetary policy and enhancing the tourism sector."
All these are crucial for Bangladesh as well, according to him. "Despite the needs," the economist said, "our country has kept the dollar rate high for a long time, which has maintained instability in the forex market."
He believes the government has begun to understand domestic economic issues and has initiated a contractionary monetary policy.
Regarding the foreign-exchange market, Dr Atiur noted an increase in remittances and exports, but a decrease in foreign direct investment due to the lack of a favourable business climate.
He advocated for simplifying investment processes in Bangladesh to boost investor confidence, which he sees as "our real-time responsibility".
Syed Muhammad Kamal, country manger, lead-remittance, South Asia, moderated the event, attended by renowned economists, CEOs and managing directors from Mastercard partner banks and financial institutions.
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