Inflation may knock 0.5m Bangladeshis down poverty line

An estimated 0.50-million people in Bangladesh are likely to be pushed down the poverty line in two years under inflationary pressure, according to World Bank's downbeat economic update.
Besides, the moderate poverty rate (at $3.65) may also increase to 29.4 per cent from 29.3 per cent to stand at 0.84 million, reports the Washington-based lender.
"As consumption growth slows and population increases, almost half a million Bangladeshis are projected to fall into extreme poverty (at $2.15) between FY2023 and FY2024," reads the Macro Poverty Outlook (MPO) 2023.
On a broader spectrum of macreconic condition the WB has said, "Elevated inflation will weigh on consumption, while private investment will remain constrained by foreign-exchange rationing."
The inflationary pressure is maintaining a higher trajectory over the last few months as point-to-point inflation has not been falling even below the 9.0-per cent rate.
According to a Bangladesh Bureau of Statistics (BBS) report, the country's poverty rate declined to 18.7 per cent and extreme poverty to 5.6 per cent in 2022.
The BBS's 2016 Household Income and Expenditure Survey (HIES) showed the poverty rate was 24.3 per cent and the extreme poverty rate 12.9 per cent.
Meanwhile, the WB forecasts inequality in Bangladesh to remain stagnant in the coming years.
It says that GDP growth is expected to decelerate to 5.6 per cent in FY2024 from 5.8 per cent in FY2023 before returning gradually to its long-term trend above 6.0 per cent.
About fiscal discipline, the MPO report says the fiscal deficit may narrow to 3.7 per cent of GDP over the medium term.
Public expenditure is expected to remain stable as a share of GDP, as declining subsidy expenditure creates fiscal space to sustain public -investment spending and support poverty-reduction expenditure.
The external conditions are expected to improve over the medium term. The current -account deficit will narrow as imports normalise with moderating commodity prices, the report says.
According to the WB, remittance inflows are expected to rise with a higher outflow of workers and resilient demand for workers in the Gulf region.
A financial-account deficit is projected to contribute to external pressure in FY2023, before returning to surplus in FY2024, reads the report.
The WB noted the real GDP growth slowed in the first half of FY2023, as high inflation weighed on private consumption and fiscal consolidation measures slowed government consumption and investment growth.
"Exports remained resilient, growing by 9.8 per cent in the first seven months (July-January) of FY2023. On the supply side, domestic industrial production was disrupted by energy-supply crunch, rising input costs and limited issuance of letters of credit due to a shortage of foreign currency."
Modest agricultural growth was sustained, although an increase in the diesel price impacted production, the multilateral lender says in its MPO report.

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