Asian Development Bank (ADB) on 28th April (Wednesday) released its latest annual flagship publication titled ‘Asian Development Outlook (ADO) 2021’ where it projected that Bangladesh’s GDP growth rate may be in the range of 5.5 per cent to 6 per cent in the current fiscal.
Besides, the GDP growth rate of the country is likely to accelerate up to 6.8 per cent in FY2021 with stimulus package implementation and recovery in global growth and world trade.
Under sustained global recovery and effective Covid-19 management, GDP growth is expected to further strengthen to 7.2 per cent in FY2022.
Compared to many developed countries in North America and Europe, and also other developing countries in Asia and the Pacific, the acuteness of the pandemic was less severe in Bangladesh during the first wave in 2020.
However, the organization also said the resurgence in Covid-19 cases and delays in availability in the supply of vaccines could undermine the economic growth outlook both globally and domestically.
Presenting the latest Asian Development Bank (ADB) report Asian Development Outlook (ADO) 2021, ADB senior economist Soon Chan Hong said ADB will provide a $940 million loan to Bangladesh to procure Covid-19 vaccine that’s under process.
Hong mentioned that ADB will support $500 million to expand social protection and promote financial inclusion and further $500 million to strengthen public financial management and enhance access to finance.
“For supporting the private sector, ADB will provide a $10 million loan for emergency working capital support to PRAN Dairy Limited and $782 million and guarantees through Trade Finance Program and Supply Chain Finance Program. Besides, a combination of guarantee and risk participation supports $200 million of local currency loans, benefiting 774,000 individual borrowers through Microfinance Risk Participation and Guarantee Program,” he added.
“Continuing strong remittances will underpin growth in private consumption, and private investment will accelerate on favourable global economic conditions and efforts to improve the business climate,” the ADB said.
Unemployment declined sharply to 3.8 per cent in September with stimulus package implementation and broad resumption of economic activities. It had increased to 22.4 per cent in April-July 2020.
On the supply side, growth in the agriculture, industry, and service sector picked up. Medium-sized and large manufacturers reversed production volume contraction by 16.4 per cent in Q4(October-December) of FY2020 with 6.8 per cent growth in Q1(January-March) of FY2021.
Likewise, bank credit to trade and commerce surged by 15.5 per cent and consumer finance by 11.9 per cent in the same period.
Cargo handled at the Chittagong port revived to the level recorded a year earlier. The commencement of the vaccination drive in February 2021, together with the improved global economic conditions and trade, and employment, helped the economic recovery.
The ADB projected that the revenue collection may also be higher than last year. Inflation is expected to be manageable in the range of 5.5 to 6 per cent. Broad money growth is likely to reach the annual target of 15 per cent.
Overall growth in imports is expected to be modest, and the trade deficit is forecast to narrow marginally as recovery in exports outpaces imports.
The current account balance is expected to cross into a small surplus. Revenue growth, however, is expected to be modest. Public expenditure is targeted to grow more than the growth in revenue leading to a slightly higher deficit – about 6 per cent.
The ADB country directors in Bangladesh, Manmohan Parkash said attaining the targets of development and other spending could be challenging as revenue collection in the first eight months of FY2021 grew by only 5.2 per cent compared to 9.1 per cent growth in the same period a year earlier.
“Concerted efforts are needed for achieving the annual development program spending and boosting revenue. The outlook is subject to downside risks. However, ADB is fully committed to supporting Bangladesh,” he also said.