Navigating Challenges and Opportunities
Bangladesh's economy has been on a recovery trajectory since the COVID-19 pandemic, but recent months have seen persistently high inflation, reaching close to 10%. This economic challenge is further compounded by the political uncertainty following the resignation of Prime Minister Sheikh Hasina and the subsequent military takeover.
Despite these hurdles, Bangladesh has consistently been one of the fastest-growing economies globally, boasting a high GDP per capita. The country's budget, passed in June 2023, targets an inflation rate of 6% and a GDP growth rate of 6.75%. However, budget spending has been cut, and the country faces issues with liquidity and forex reserves.
International agencies have urged Bangladesh to implement structural reforms to sustain its growth and maintain economic stability. The World Bank, in its April 2023 report, projected a GDP growth of 5.7% between July 2024 and June 2025. The report also highlighted the need for urgent monetary reform and a single exchange rate regime to improve foreign exchange reserves and curb inflation.
IMF data reveals that Bangladesh's economy has consistently grown over 5.5% annually since 2010, except for 2020 when it grew by 3.4%. While GDP growth reached a high of 7.9% in 2019, the pandemic slowed the recovery. The IMF expects Bangladesh's GDP growth to slow to 5.7% in 2024.
Notably, Bangladesh's GDP per capita has surpassed India's since 2018. However, IMF data suggests that India's GDP per capita is expected to outpace Bangladesh's in 2024.
The IMF, in its 2023 Article IV Consultation on Bangladesh, emphasized the need for tighter monetary policy, neutral fiscal policy, and greater exchange rate flexibility to restore near-term macroeconomic stability. The IMF-supported program aims to unlock Bangladesh's growth potential, harness its demographic dividend, and support long-term inclusive and green growth.
Despite the recent challenges, Bangladesh's economic fundamentals remain strong. The country's impressive growth trajectory over the past decades, coupled with its declining poverty rate, demonstrates its resilience and potential. By addressing the current economic and political uncertainties and implementing necessary reforms, Bangladesh can continue on its path of sustainable and inclusive growth.