StanChart forecasts 7.2pc GDP growth
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He described the central bank’s foreign currency position as very healthy, thanks to a sharp increase in reserves in the last 18 months.
“That actually puts the central bank in a very strong position to manage the foreign currency market.”
Standard Chartered has a neutral outlook on the taka and forecasts that the dollar will trade at Tk 86 towards the end of December.
“We continue to think that the taka will outperform the most currencies in the emerging markets in Asia,” Devesh said.
Eric Robertsen, global head of research and chief strategist of Standard Chartered, said the economic recovery in Asia and globally would continue although it had been extremely uneven.
The recovery in global trade is the key highlight of the global revival.
“More specially, the recovery in the exports in the emerging markets has been one of the best we have ever seen.”
From the lows of early 2020, the recovery in exports took only two quarters to return to the pre-pandemic level. A similar recovery after the global financial crisis in 2007-08 took two years.
The speed of the recovery has been much faster. This is because emerging markets are trading more with each other than ever before, accounting for nearly 50 per cent of their total trade.”
“It is no longer just about the US or China,” Robertsen said.
According to the researcher, a pickup in demand has created a short-term inflationary surge, exacerbated by the rise in prices of crude oil, copper and natural gas.
“In 2022, I think the supply chain will reopen as the economies continue to come out of lockdowns, and that should remove some of the inflationary pressures.”
“The US dollar should ultimately weaken in the medium to long term, and that should remain a source of support to the emerging markets.”
On the monetary side, import-dependent Bangladesh is feeling a bit of pressure because of the rising commodity prices.
“Non-food inflation is likely to be higher,” Anand said.
Standard Chartered forecasts 5.6 per cent inflation in the current fiscal year, higher than the central bank’s target of 5.3 per cent.
With rising commodity prices, rebound in demand and constraints facing the supply side and liquidity remains high, inflation will shoot up, the economist said.
He said the private sector investment was coming back in keeping with the accelerating coronavirus vaccination programme, driving up the credit demand.
The liquidity build-up would see correction as the central bank is selling US dollars. Once the private sector credit growth picks up, the excess liquidity correction will take place automatically.
In Bangladesh, private sector credit growth is still 8.5 per cent.
Anand said the credit growth would pick up once the vaccination rate crosses a particular threshold and businesses feel more confident.
Globally, the ratio of non-performing loans would go up once the moratorium support is rolled back, he said.
Muhit Rahman, head of financial markets of StanChart Bangladesh, said clients had been talking about investments and expansion projects for the last two months.
“In the last one and a half years, clients did not talk to us about investments.”
The credit growth would pick up in March-April, he said, adding that garment, textile, and steel manufacturers were talking about expansion projects.
With the reserves hovering around $48 billion, the country is in a very comfortable position, Rahman said. “Overall, we are very optimistic about the economy.”
Bitopi Das Chowdhury, head of corporate affairs, brand and marketing of StanChart Bangladesh, said: “The credit growth is picking up in the personal banking as well.”
Earlier, Planning Minister MA Mannan attended a virtual event where around 300 of the bank’s clients joined in via video conferencing.
The minister said: “The people of Bangladesh, the government and the business community have once again demonstrated tremendous resilience to ensure that while our shared development journey might have slowed, it has not been halted.”
“We remain as committed as ever in fostering a business-friendly climate so that we can continue our journey of inclusive progress and prosperity,” he said, according to a press release of the bank. Naser Ezaz Bijoy, chief executive officer of Standard Chartered Bangladesh, said the government had navigated the internal and external challenges of the pandemic remarkably well.
“The resilience of Bangladesh economy gives us cause for optimism. As the vaccination drive continues, the economy is set to accelerate.”
There are significant opportunities for productivity gains through technology adoption and technology inclusiveness through mobile-based solutions and the information technology-enabled service sector, he said.