The country may overtake Asia’s two giant economies — India and China — in the next FY24 in economic growth, the International Monetary Fund (IMF) predicted in its latest evaluation report.
Bangladesh will outgrow China in the current FY23 with its projected higher gross domestic product (GDP) growth, the global monetary supervisor also said.
According to the IMF, Bangladesh’s economy may grow at a 6.5% rate in the next FY24 while the Chinese economy at 4.5% and India at 6.3%.
Although Bangladesh’s GDP growth rate is forecast lower than India’s in the current fiscal, it will be higher than China’s in FY23.
In the current fiscal, Bangladesh might expand at a rate of 5.5% while China at 5.2%.
The Indian economy will grow at 5.9% in the current fiscal, the IMF said in its “Regional Economic Outlook: Asia and the Pacific” report, released on May 4 in Washington.
However, Vietnam, Bangladesh’s competitor country on the global trade market, is likely to expand at a higher rate than Bangladesh’s.
Vietnam’s economy is projected to grow at 5.8% rate in the current FY23 while at 6.9% in the next FY24.
The IMF recently cut Bangladesh’s GDP-growth projection to 5.5% in the current fiscal amid the global and domestic economic shocks.
In October 2022, the Washington-based lender forecast a 6% GDP growth for Bangladesh in the current fiscal.
“The recently approved Extended Fund Facility will help address economic challenges caused by Russia’s war in Ukraine, while the concurrent Resilience and Sustainability Facility arrangement will help expand fiscal space to finance climate investment priorities and build resilience against long-term climate risks.”
In most emerging markets in the region, 2023 fiscal balances will remain well below medium-term debt-stabilizing levels. Moreover, if borrowing costs were to rise faster than currently projected (that is, because of a tightening in financial conditions), a much steeper fiscal adjustment would be required to stabilize debt, the development financier said in its suggestions.
“At the same time, fiscal pressures linked to aging populations, rising inequality, scarring from the pandemic, increasing climate mitigation and adaptation needs are expected to increase over the coming years. These trends underscore the need for credible and robust fiscal frameworks.”
The IMF notes that food security is imperative for sustainable growth in Asia as the insecurity increases in 2022 due to supply-chain disruptions and Russia’s war in Ukraine.
Reforms stressed, as such, for combating food insecurity include developing robust social safety nets, maintaining open trade to allow food to flow to countries in need, and investing in climate-resilient agriculture.