World Bank forecasts 7.3% GDP growth for Bangladesh

Bangladesh continues to be among the five fastest growing economies in the world, thanks to stable macro and export-oriented industry-led growth, the World Bank said in a new report.

But private sector investments remain insufficient along with declines in foreign direct investment.

Growth outlook remains strong and stable, according to the report.  The World Bank predicted 7.3 percent economic growth for Bangladesh for the current fiscal year.

“Sound macroeconomic policies – such as keeping the budget deficit below 5 percent of GDP – and resilient domestic demand have led to growth in manufacturing and construction industries on the supply side,” the WB said. 

On the demand side, growth is led by private consumption and exports. After a modest performance last year, export earnings and remittances have bounced back helping the rural economy grow faster. In addition, the country has substantially improved its electricity generation and a bumper agricultural harvest has further stimulated growth, according to the report.

World Bank Dhaka office’s Lead Economist Zahid Hussain speaking at the launch of spring 2019 edition of the Bangladesh Development Update: Towards Regulatory Predictability on Thursday. Photo: Asif Mahmud Ove

Foreign direct investment remains low at less than 1 percent of GDP. Net FDI inflow amounted to $910 million in the first half of FY19, compared with $823 million in the first half of FY18.

The share of machinery in total imports for leading industries such as textiles, garments, pharmaceuticals, packing and leather has also declined, reaching 31.8 percent in July-November 2018 from 55.6 percent in 2009.

“For Bangladesh to be an attractive destination for industries, it is critical to make resources such as land, electricity and gas available,” the WB said in the report.

Businesses face regulatory uncertainty in Bangladesh on various fronts. “Regulatory predictability matters because it makes property rights insecure, thereby constraining investment. This leads to uncertainty for businesses – medium-size firms seem to bear the brunt more than large or small firms – and with inconsistencies in policy implementation, it can adversely affect employment growth,” the WB said.