It estimates the economy’s real GDP growth at 5.6% in the current fiscal year “as elevated inflation has dampened real wage growth and weighed on private consumption, and higher borrowing costs have weighed on demand”.
It estimates the economy’s real GDP growth at 5.6% in the current fiscal year “as elevated inflation has dampened real wage growth and weighed on private consumption, and higher borrowing costs have weighed on demand”.
On the FY25 and FY26 projections, it said, “In addition to an increase in private consumption because of easing inflation, the implementation of large investment projects will support a pickup in overall investment.”
In its June edition of Global Economic Prospects released on Tuesday, the Washington-based lender said shortages of inputs and imported goods are expected to ease gradually. A more flexible exchange rate policy is envisaged to help increase remittance inflows and reduce balance of payments pressures.
However, the projections are still lower than the government’s targets for the next two fiscal years and slower compared to the past several years.
In the proposed budget, the government has set a target of 6.75% growth in FY25 and 7.0% in FY26.
Moreover, the flagship report of the World Bank also mentioned, “High levels of non-performing loans in the banking sector dampened investor confidence.”
Growth in South Asia to slow in 2024
Growth in South Asia is projected to slow from 6.6% in 2023 to 6.2% in 2024 and stay at that rate over 2025-26, mainly reflecting steady growth in India.
“Among the region’s other economies, growth is expected to remain robust in Bangladesh, though at a slower rate than in the past several years, and to strengthen in Pakistan and Sri Lanka,” read the report.
In India, growth of 6.7% per year, on average, is projected for the three fiscal years beginning in FY25.
Growth is also projected to rise in Bhutan and Nepal, partly reflecting strong output in the hydropower sector. Strengthened activity in the Maldives will be supported by the expansion of an international airport in 2025.
In contrast, the economy of Afghanistan is set to remain fragile, with high unemployment, food insecurity, and poverty.
Global growth stabilising for first time in three years
The global economy is expected to stabilize for the first time in three years in 2024—but at a level that is weak by recent historical standards.
Global growth is projected to hold steady at 2.6% this year, despite flaring geopolitical tensions and high interest rates, before edging up to 2.7% in 2025-26 alongside modest expansions of trade and investment.
“Global inflation is expected to moderate at a slower clip than previously assumed, averaging 3.5 percent this year. Central banks in both advanced economies and emerging market and developing economies are likely to remain cautious in easing policy,” read the report.
Indermit Gill, the World Bank Group’s chief economist and senior vice president, said, “Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying.”
He added, “However, growth is at lower levels than before 2020. The prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events.
He also said developing economies will have to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure. The poorest among them – especially the 75 countries eligible for concessional assistance from the International Development Association – will not be able to do this without international support.
source: https://www.tbsnews.net/economy/wb-forecasts-steady-slight-growth-bangladesh-next-two-fys-874876
