The IMF has drawn ominous parallels between Bangladesh’s revenue collection and South Sudan, where collections are virtually non-existent.
At the same time, the ADB has significantly downgraded its growth forecast to 5.1 percent for the current fiscal year, with mining magnate Khalid Mahmood pointing out that when readjusted for population growth, Bangladesh’s economic growth rate is actually minus one percent.
At the same time, the industry size is now 26 percent down from five years ago.
The Asian Development Bank downsized its self-projected economic growth forecast for Bangladesh to 5.1 percent in the fiscal year 2024-25 from 6.6 percent.
This contraction mainly reflects supply shocks related to political tensions that swept the country in July and August 2024.
The forecast also takes into account the effects of the recent floods, which have added to the economy’s woes.
The ADB opines that “the analytical conclusion is that persistent political instability, a still fragile law and order situation, and vulnerabilities in the financial system create a highly uncertain macroeconomic environment.”
The lender believes that tighter fiscal and monetary policies will continue to control consumption and investment demand and are part of the larger economic stagnation scenario.
Interestingly, Bangladesh has not been able to clock growth rates above 6% in the past two fiscal years, with FY2023 logging 5.78% and FY2024 posting 5.82%.
The ADB says a continued high inflation rate will only add to Bangladesh’s already turbulent economic landscape, eventually leading to double-digit inflation.
Heightened commodity and energy prices and the deceleration of the Bangladeshi Taka also feature among the contributory factors.
The ADB has said that exports and imports have declined simultaneously, even as the current account deficit has decreased. This is a sign of underlying weaknesses in the economy.
