HSBC projects 6.2% growth for Bangladesh in FY22

The Hongkong and Shanghai Banking Corporation (HSBC) has forecast that Bangladesh's GDP growth will be 6.2% this fiscal year. 

It says returning to normalcy through vaccination, moderate inflation, remittance inflow, and a rise in exports of readymade garments will increase private consumption. 

This will cause the pace of growth to continue, HSBC officials told a webinar held on Wednesday to publish its research titled "Bangladesh Market Insights 2021: Consumption Propelling Growth". 

Devendra Joshi, equity strategist of ASEAN and Frontier Markets at HSBC Global Research, said Bangladesh had earned great success in remittance and exports in the last decade.  

He said the country had also done well in power and infrastructure sectors, but education and healthcare could not catch up with GDP growth. 

Bangladesh's capital market lags far behind compared to its economy, he said.   

Describing Bangladesh and Vietnam as competitors that have similar markets in terms of size and movement, he said the latter's stock market grew four times in the last 10 years.   

But Bangladesh's market during this period remained almost the same and that is why HSBC thinks now is a good time to invest in the market, he said.    

The HSBC research compared Bangladesh's performance with its competitors in several indicators in the last decade, such as foreign investment, consumption, and women empowerment. It concluded that Bangladesh's position is satisfactory in almost all indicators.     

Md Mahbub ur Rahman, chief executive officer of HSBC Bangladesh, said the increase in remittance and export earnings had created a big consumer class in the country in the last 10 years. 

He thinks there are great opportunities now to invest because of this big consumer class. 

The World Bank has forecast growth to increase to 5.1% in the 2021-22 fiscal year and 6.2% in 2022-23. 

But it thinks growth will be under pressure in the next financial year like this year due to the coronavirus pandemic.

The government's growth forecast for FY22 stands at 7.2%.  

Kutubuddin Ahmed, chairman of Envoy Group, said Bangladesh still has port-related problems that increase import-export costs a lot.    

He thinks depending on Colombo's ports in Sri Lanka is the reason behind this. 

Discussions are needed right away to take advantage of GSP+ facilities in the European market, he added. 

Dr Ahmad Kaikaus, principal secretary to the prime minister, said Bangladesh is prioritising Singapore and Malaysia to reduce the dependence on Colombo ports. 

He said Chattogram port is being made more effective while Payra, Mongla, and Matarbari ports are being prepared as well. 

Work has been a bit slow due to the pandemic but there are plans to expedite it, he added.  

He also said industrialisation had grown in the country due to infrastructure development and facilitating the private sector. 

This is a big reason for the increase in consumption, he said.  

He further said Bangladesh's economic growth had surprised everyone, but it is the only country where the capital market does not reflect the state of the economy.

Raising money from the stock market can be a great way to invest, said Kaikaus, who attended the programme as the chief guest.  

Among others, Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, and Sandeep Uppal, global co-head of International Subsidiary Banking of HSBC Asia Pacific, spoke at the event.