Bangladesh will miss GDP growth target by 1 percentage point: World Bank

The World Bank has forecast that Bangladesh’s GDP growth in 2019-20 fiscal year will 7.2 percent, 1 percentage point short of the government’s target.

The global lender made the forecast in a report - ‘Bangladesh Development Update, October 2019: Tertiary Education and Job Skills’ published in Dhaka on Thursday.

It hailed growth in remittances and net exports and rise in net foreign direct investment, but said private sector credit growth was weak and bank liquidity remains constrained.

Non-performing loans continued to rise in the banking sector, the World Bank noted.

The report warns about an uncertain global outlook and domestic risks in the financial sector.

“Exchange rate appreciation is also a challenge for Bangladesh’s trade competitiveness,” it said.

The report urged for reforms in the financial sector, including revenue mobilisation and doing business, along with closing the infrastructure gap and timely implementation of the Annual Development Plan.

“Bangladesh’s economy is projected to maintain strong growth backed by sound macroeconomic fundamentals and progress in structural reforms,” said, World Bank Country Director for Bangladesh and Bhutan.

“To achieve its growth vision, Bangladesh will need a high-productivity economy. Human capital development that is responsive to labor market demand for higher-level skills and to rapid technological advancements will be crucial,” the World Bank quoted its Country Director for Bangladesh and Bhutan Mercy Miyang Tembon as saying at an event marking the publication of the report.

“Labor market surveys repeatedly show that employers struggle to fill high-skill positions such as technicians and managers,” World Bank Senior Economist and co-author of the report Bernard Haven said, according to a World Bank press release.

“To bridge the demand and supply gap, investments in skills training, equitable access for female and poor students, public funding mechanisms to develop market-relevant skills and an effective regulatory and accountability framework are needed,” he added.

JOBS AND EDUCATION

Bangladesh needs to create quality jobs for about two million young people entering the labour force every year, the report said.

The country needs to invest significantly in human capital like teaching, learning and ICT facilities, among other areas, to create a competitive workforce and harness the benefits of this growing labour supply, it said.

It suggested higher labour productivity for diversification of the economy beyond garment exports and remittances.

Growing sectors—such as export-oriented manufacturing, light engineering, shipbuilding, agribusiness, ICT, and pharmaceuticals—will require skilled professionals in managerial, technical, and leadership positions, the World Bank said in the report.

“Tertiary graduates struggle to find jobs, indicating a major skills gap,” it said.

Only 19 percent of college graduates are employed full-time or part-time, according to the report.

“At the tertiary level, more than a third of graduates remain unemployed one or two years after graduation, while unemployment rates of female graduates are even higher.”