Bangladesh sets 7.5% GDP growth target for FY24 despite uncertainties

Finance Minister Kamal tabled a national budget worth Tk 7.61tn, the biggest in the country's history, in parliament for FY24 on Thursday

Senior Correspondent
Published : 1 June 2023, 09:35 AM
Updated : 1 June 2023, 09:35 AM

Bangladesh has targeted an ambitious 7.5% GDP growth in FY24 despite the uncertainties of the global economy and various challenges.

Finance Minister AHM Mustafa Kamal tabled a national budget worth Tk 7.61 trillion, the biggest in the country's history, in parliament for FY24 on Thursday.

The minister explained in his budget speech why he is expecting higher growth this time despite the economic pressures.

"On the whole, we expect to return to a higher growth trajectory and achieve a 7.5 per cent GDP growth in the coming fiscal year, by way of investing in the productive sectors and stimulating productivity and domestic demand," he said.

"To achieve the growth target, we will gradually come out of the contractionary policy and invest in ongoing and new growth-inducing projects including the mega-projects."

Although many economists consider the growth rate as a measure of economic dynamism, they are reluctant to accept it as an indicator of sustainable development. Still, this aspect of the economy has been repeatedly discussed in the politics of Bangladesh.

In FY19, Bangladesh achieved a record 8.15 per cent GDP growth. Then came the pandemic. The finance minister set a growth target of 8.2 per cent in FY20, but the actual growth achieved was 3.45 per cent, the lowest in several decades.

The growth rate increased to 6.94 per cent in FY21 after recovering from pandemic effects. The GDP growth further increased to 7.1 per cent in FY22.

Investment in Bangladesh fell during the pandemic. The country weathered the crisis with vaccines and lockdowns and was making a decent recovery until Russia began its invasion of Ukraine. The war caused global instability and further affected the economy.

All countries around the world are experiencing the repercussions of the war to varying degrees. Prices of various commodities, including food, have risen in the international market, and the exchange rate of the dollar has also increased. As a result, the production cost of goods has also increased.

Economists predicted that the war was going to have a major impact on Bangladesh's economic growth and social security and that prediction has come true.

The government had initially set a target of 7.5 per cent GDP growth in the budget for FY23. The finance ministry then revised it down to 6.5 per cent. However, even with the revised target, the current projections from the Bangladesh Bureau of Statistics put GDP growth in FY23 at 6.03 per cent based on the first nine months of the fiscal year.

The World Bank's projection suggests that Bangladesh's GDP growth in the outgoing fiscal year will be even lower, at 5.2 per cent.

The size of the country's GDP has decreased by 1.38 per cent when measured in dollars due to the devaluation of the taka against the dollar, according to the temporary estimates of the statistics agency.