World Bank cuts down Bangladesh GDP forecast, cautions dampening growth in South Asia

The World Bank has cut down the GDP growth rate projection for Bangladesh for the FY 2022-23 to 6.1 percent. It is lower by 0.6 percent from the projection it made in June this year. The World Bank in its latest South Asia update released on Thursday, said the region will grow at 5.8 percent this year. This is 1 percentage point lower than the forecast made in June. The growth rate for South Asia in 2021 was 7.8 percent when most countries were rebounding from the pandemic slump.

Inflation in South Asia, caused by elevated global food and energy prices and trade restrictions that worsened food insecurity in the region, is expected to rise to 9.2 percent this year before gradually subsiding. The resulting squeeze on real income is severe, particularly for the region’s poor who spend a large share of their income on food, says the report.

The update points out the uneven recovery in growth rate of the South Asian countries. Exports and the services sector in India, the region’s largest economy, have recovered more strongly than the world average while its ample foreign reserves served as a buffer to external shocks.

Referring to the pandemics, sudden swings in global liquidity and commodity prices, and extreme weather disasters, World Bank Vice President for South Asia, Martin Raiser said that countries need to build stronger fiscal and monetary buffers, and reorient scarce resources towards strengthening resilience to protect their people.