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GDP growth not over 5.3pc this fiscal year
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The WB projects regional growth to be an average of 5.6 percent in 2023, a slight downward revision from the October 2022 forecast. All countries in the region except Bhutan have downgraded their forecasts.
In India, South Asia’s largest economy, growth would be 6.3 percent, while Pakistan’s GDP growth is projected to drop to 0.4 percent this year. In Sri Lanka, GDP is expected to contract by 4.3 percent this year. The Maldives would grow at 6.6 percent and Nepal at 4.1 percent.
“The situation in Bangladesh is not similar to Pakistan and Sri Lanka in that there is no imminent crisis, especially not after an agreement was reached with the IMF,” said Hans Timmer, the WB’s chief economist for South Asia, at a virtual press conference yesterday.
But there are challenges that need to be addressed.
“The challenges are very much concentrated on the balance of payments and the financial sector,” he said, while calling for reducing the distortions in the economy and putting the fiscal situation on a sustainable path.
A widening BoP deficit from the second half of fiscal 2021-22 led to a sharp decline in foreign exchange reserves, said the WB’s Bangladesh Development Update, which was unveiled yesterday.
The declining reserves were further exacerbated by a multiple exchange rate regime that has disincentivised export and remittance inflows.
The BoP deficit surged in the first half of the fiscal year, but resilient export growth and slowing imports narrowed the current account deficit, the WB said.
“Downside risks to the outlook are rising and external risks remain elevated.”
A further rise in commodity prices could increase imports and worsening global economic conditions would limit export growth.
“Continued import controls and energy rationing would disrupt industrial production. Unresolved financial sector vulnerabilities may disrupt financial sector intermediation,” it added.
Bangladesh’s post-pandemic recovery has been disrupted by elevated commodity prices, rising interest rates and slowing global growth, said Abdoulaye Seck, the WB’s country director for Bangladesh and Bhutan, at the event to unveil the report yesterday.
“The dollar became dearer, commodity prices rose, but peoples’ wages did not rise in every sector at the same pace. So, real wages declined and people’s purchasing power dropped.”
He went on to call for three policy reforms: removal of the lending rate cap, international standard legislation for banks and market-determined exchange rate.
Bangladesh must also reform its trade policy by removing trade barriers, he added.
The latest edition of ADB’s Asian Development Outlook, also released yesterday, made similar observations.
Inflation is forecast to accelerate from 6.2 percent last fiscal year to 8.7 percent as price pressures increase due to the upward adjustment of domestic-administered prices for fuel oil, gas, and electricity, and higher global commodity prices.
The current account deficit is anticipated to narrow from 4.1 percent of GDP in fiscal 2021-22 to 1.6 percent of GDP as imports loosen and remittances grow.
“The main risk to this growth projection is a greater economic slowdown in Bangladesh’s major export destinations driven by global uncertainty over the prolonged political tensions.”
The Asian Development Outlook April 2023 states that private investment growth will be lower because of energy shortages and higher production costs. With a shortfall in revenue collection, austerity measures, and depleting foreign exchange reserves, public investment growth will also be slower.
“The ongoing geopolitical crisis is an opportunity to increase economic resilience of Bangladesh by carrying out key reforms,” said ADB Country Director Edimon Ginting at the launch of the report.
Expected graduation from least-developed country status in 2026 and aspiration to become an upper middle-income country by 2031 and a high income-country by 2041 have also created an urgent need for carrying out key reforms, he added.

Regional highways
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The premier said this while chairing a meeting of the Executive Committee of the National Economic Council held at the NEC Conference Room in the capital’s Sher-e-Bangla Nagar.
Hasina also expressed shock at the tragic fire incident at the Bangabazar in the capital.
Planning Minister MA Mannan and State Minister for Planning Shamsul Alam briefed the reporters after the meeting.

Repeal DSA
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name of ‘hurting religious sentiment’ should be brought to book and the cases filed against Prothom Alo editor and other journalists must be withdrawn.”
Quoting Voltaire on the freedom of expression, Robaet Ferdous, professor of mass communication and journalism at Dhaka University, said the beauty of democracy lies in the fact that it accommodates opinions and counter-opinions. “In any democracy, this practice must be welcomed.”
Urging the government to revoke the law, he said the DSA is being used to silence the dissenting voices of journalists, human rights activists and critics.
Iftekharuzzaman, executive director of Transparency International Bangladesh, said that DSA has triggered a sense of insecurity instead of ensuring security.
“The law stands against the spirit of the Liberation War and has become a tool to oppress people.”
Senior lawyer Tabarak Hossain, Kazol Debnath, member of Bangladesh Hindu-Bouddho-Christian Oikkyo Parishad, also spoke at the programme.