IMF downsizes growth forecast

The International Monetary Fund yesterday trimmed Bangladesh's growth forecast for this fiscal year to 6 percent, following in the lead of its sister organisation, the World Bank.

In the previous edition of its flagship publication 'World Economic Outlook' that came out in April, the IMF had projected that the Bangladesh economy would grow at 6.5 percent in fiscal 2023-24 and at 5.5 percent in fiscal 2022-23.

In the latest edition of the flagship publication themed 'Navigating Global Divergences' that was released yesterday at the annual meetings of the World Bank-IMF in Marrakech, it is said that Bangladesh's economy grew at 6 percent in the immediate past fiscal year.

The downsized growth forecast for this fiscal year comes a week after the WB lowered Bangladesh's growth projection to 5.6 percent amid sustained high inflation and external payment challenges.

"This is normal -- this should have been done," said Ahsan H Mansur, a former economist of the IMF.

The government has targeted a 7.5 percent GDP growth for this fiscal year.

"If we get 5 percent [GDP growth], we should be lucky. There is no investment. Even if we disregard investment, imports, consumption demand and macro indicators, they are all collapsing. We are going backwards. Without imports there won't be any growth," said Mansur, the executive director of the Policy Research Institute.

"If we get 5 percent, we should be lucky. There is no investment. If we leave out investment, import, consumption demand and macro indicators, they are all collapsing. We are going backwards. Without imports there won't be any growth."

— Ahsan H Mansur Executive Director Policy Research Institute

Global growth is forecast to slow from 3.5 percent in 2022 to 3 percent in 2023 and 2.9 percent in 2024, the IMF said. The projections remain below the historical (2000–19) average of 3.8 percent, and the forecast for 2024 is down by 0.1 percentage points from the July 2023 Update to the World Economic Outlook.

"If the world economy goes bad, there would be impact on our economy. But our domestic problems are the main challenge here," said Mansur, while citing the uncertainty surrounding the election as a major drawback.

Bangladesh though will be logging in the second-highest GDP growth in South Asia, behind only India (6.3 percent).

The report also said inflation would average 7.2 percent this fiscal year, way above the government's target of 6 percent. This would be the second-highest inflation in the South Asia region, bested by Pakistan, where inflation is projected to hit 17.5 percent.

Inflation averaged 9.75 percent in the first three months of the fiscal year, according to data from the Bangladesh Bureau of Statistics.

Last fiscal year, inflation averaged 9.7 percent, according to the IMF report.

The deficit in the current account balance is expected to widen to 0.8 percent of GDP this fiscal year, up from 0.7 percent last fiscal year.

In the first two months of the fiscal year, the current account balance returned to the positive territory at $1.1 billion from a negative of $1.46 billion a year earlier, according to data from the Bangladesh Bank.