Cenbank scales down GDP forecast to 6.5% for FY24
Providing insights into inflation, the central bank estimates point-to-point inflation at 8% by January and 6% by June.
The Bangladesh Bank forecasts a minimum GDP growth of 6.5% in the fiscal 2023-24, down from the government's optimistic projection of 7.5%.
This outlook aligns with the Asian Development Bank's September estimate but falls below assessments by the World Bank, the International Monetary Fund, and credit rating agencies Fitch and Moody's.
The Bangladesh Bank in a statement distributed to the media attributes the anticipated growth to the completion and progression of major projects, robust activities in the industrial and services sectors, and a favourable agricultural output.
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Providing insights into inflation, the central bank estimates point-to-point inflation at 8% by January and 6% by June. It attributes this to contractionary measures implemented by the Bangladesh Bank and the government, including policy rate hikes and the removal of caps on lending and deposit rates to align with market forces.
Additional measures to curb inflation involve the decision not to lend to the government by printing money and tightening import regulations.
Addressing foreign exchange reserves, the central bank notes that Bangladesh's forex reserves, as per the IMF's BPM-6, stand at nearly $20 billion, equivalent to four months' worth of import bills. The central bank expresses optimism that stability in exchange rates and overall reserve positions could be achieved if the US Federal Reserve refrains from further policy rate hikes or opts for a reduction.
The statement says an improvement in the current account balance, now at a $1 billion surplus compared to last year's $3.3 billion deficit. However, challenges persist in the negative financial account, impacting the overall balance of payments.
In response to these economic challenges, the central bank and the government are collaboratively implementing measures. The Bangladesh Bank is hopeful that increased exports and remittances, coupled with eased inflation, will materialise as the global economic situation improves.
Anticipating an economic upturn after the scheduled national elections in January, the central bank envisions a rebound towards the end of the fiscal year.
