Dhaka, April 2, 2024—Bangladesh’s economy has recovered strongly from the COVID-19 pandemic, but the post-pandemic recovery continues to be disrupted by peak inflation, a persistent balance of letters deficit, monetary sector vulnerabilities, and global economic uncertainty. “says the World Bank in its semi-annual update.
The latest Bangladesh Development Report, released today, says urgent currency reform and a single exchange rate regime will be key to increasing foreign exchange reserves and mitigating inflation. Greater exchange rate flexibility would help restore the balance between demand and source in the foreign exchange market. Structural reforms will be key to diversifying the economy and building resilience in the medium and long term, adding measures to increase government revenues to investments in infrastructure and human capital.
Persistent inflation has eroded consumers’ purchasing power, while investment has been held back by tighter liquidity, emerging interest rates, import restrictions, and higher input prices as a result of upward revisions to managed energy prices.
The expansion of credit to the personal sector slowed further in FY24, reflecting a broader slowdown in investment. The NPL ratio in the banking sector remains high and underestimates the stress in the banking sector due to lax reporting definitions and standards, leniency. weak regulatory measures and enforcement. The bill deficit moderated in the first part of FY24 on the back of an existing account surplus.
“Bangladesh’s strong macroeconomic fundamentals have helped the country overcome many challenges beyond,” said Abdoulaye Seck, World Bank Country Director for Bangladesh and Bhutan. “Faster and bolder fiscal, economic and economic reforms can help Bangladesh’s macroeconomic stability and revive growth. “
The report’s other major document, the latest South Asia Development Update: Jobs for Resilience, also released today, indicates that South Asia is expected to remain the fastest-growing region globally over the next two years, with a projected expansion of 6. 0%. in 2024 and 6. 1% in 2025. Se the expansion in South Asia is expected to be driven primarily by physically powerful expansion in India and Bangladesh, as well as recoveries in Pakistan and Sri Lanka.
But this strong outlook is misleading, the report argues. For most countries, expansion remains at pre-pandemic levels and depends on government spending. Persistent structural constraints threaten to undermine sustainable expansion, hampering the region’s ability to create jobs and respond to climate shocks. The expansion of private investment has slowed dramatically across South Asia. countries, and the region is creating enough jobs to keep pace with the immediate growth of its working-age population.
“South Asia’s expansion clients remain bright in the near term, but fragile public finances and emerging climate shocks are dark clouds on the horizon,” said Martin Raiser, World Bank Vice President for South Asia. “To make the expansion more resilient, countries want to adopt policies to stimulate personal investment and job expansion. “
The expansion of the working-age population in South Asia has outpaced that of other parts of the emerging countries. The percentage of the working-age population hired has been declining since 2000 and is low. In 2023, the employment rate in South Asia was 59%, compared to 70% in other emerging markets and regions with emerging economies. It is the only region where the proportion of working-age men with employment has declined over the past two decades, and the region where the proportion of working-age men in employment is the lowest.
“South Asia has not been taking full advantage of its demographic dividend lately. This is a missed opportunity,” said Franziska Ohnsorge, World Bank Chief Economist for South Asia. “If the region were to hire as gigantic a percentage of the working-age population as in other emerging markets and emerging economies, its output may be only 16% higher. “
Country Perspectives
Real GDP expansion in a consistent market (percentage)
Revised forecasts as of October 2023 (percentage points)
country’s fiscal year
Calendar Base
2022
2023 (mi)
Jan 2024 (f)
2025 (f)
Jan 2024 (f)
2025 (f)
South Asia Region (excluding Afghanistan)
5. 7
6. 6
6. 0
6. 1
0,4
0,3
Maldives
January to December
13. 9
4. 0
4. 7
5. 2
-0,5
-0,3
Sri Lanka
January to December
-7. 3
-2. 3
2. 2
2. 5
0,5
0,1
Basis of the exercise
21/22
22/23 (E)
23/24 (G)
24/25 (f)
23/24 (G)
24/25 (f)
Bangladesh
July to June
7. 1
5. 8
5. 6
5. 7
0,0
-0,1
Bhutan
July to June
4. 8
4. 6
4. 9
5. 7
0,9
1. 1
India
April to March
9. 7
7. 0
7. 5
6. 6
1. 2
0,2
Nepal
Mid-July to mid-July
5. 6
1. 9
3. 3
4. 6
-0,6
-0,4
Pakistan
July to June
6. 2
-0,2
1. 8
2. 3
0,1
0,0
Sources: World Bank Macro-Poverty Outlook and World Bank staff estimates.
Note: (e) = estimate; (f) = prognosis. GDP measured in average costs and market exchange rates over the period 2010-2019. Pakistan is informed at the cost of the thing. National accounts statistics for Afghanistan are available. To estimate the forecast of regional aggregates for the calendar year, the forecast for the fiscal year is changed. to the calendar year taking the average of two consecutive fiscal years for Bangladesh, Bhutan, Nepal and Pakistan, as quarterly GDP forecasts are available.
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