Bangladesh’s economic outlook dims; World Bank lowers GDP forecast for FY25

The World Bank has lowered the GDP growth forecast for Bangladesh by 0.1 percentage point to 5.7 per cent for the next fiscal year (FY2025). High inflation, a persistent balance of payments deficit, financial sector vulnerabilities, and global economic uncertainty has been disruptive for the post-Pandemic recovery of Bangladesh’s Economy, said the World Bank during the release of Bangladesh Development Update report in Dhaka on Tuesday.

The World Bank, however, keeps the growth projection unchanged for the current fiscal year for Bangladesh.The bank said that urgent monetary reform and a single exchange rate regime will be critical to improve foreign exchange reserves and ease inflation.

Greater exchange rate flexibility would help restore balance between demand and supply in the foreign exchange market, said the report.

The World Bank suggested that structural reforms will be key to diversify the economy and build resilience over the medium and long term, including measures to raise government revenues to support investments in infrastructure and human capital.

In Bangladesh, persistent inflation eroded consumer purchasing power, while investment was dampened by tight liquidity conditions, rising interest rates, import restrictions, and increased input costs stemming from upward revisions in administered energy prices, said Abdoulaye Seck, World Bank Country Director for Bangladesh.

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