Economic Recovery: Bangladesh leads the way in South Asia

Despite the recent spike in Covid-19 infections, South Asia excluding India is recovering, led by Bangladesh, because of higher-than-expected exports and remittances, the International Monetary Fund said yesterday.

The Washington-based multilateral lender revised its GDP projection for Bangladesh to 5 percent in 2021, up from its October last year's projection of 4.4 percent.

The country's economy is likely to grow 7.5 percent the next year, said the IMF at its Spring Meetings which occurred virtually.

With a remittance income of $18.60 billion, the united states recorded 35 percent year-on-year spike in remittances in the first nine months of the current fiscal year, because of migrant personnel and non-resident Bangladeshis who sent money home, data from Bangladesh Bank shows.

While the overall export remained slightly below the last year's level in July-March period of the existing fiscal year, shipment soared by 13 percent year-on-year to $3.7 billion from this past year, shows data of Export Promotion Bureau (EPB).

The IMF said the pandemic has led to unprecedented output losses in the Asia-Pacific region.

"Losses varied widely across economies as a function of the stringency and effectiveness of containment policies; reliance on tourism and contact-intensive services; and the amount of policy support. A number of the Pacific Island countries have already been among the worst affected," said Deputy Director of IMF's Asia and Pacific Department Jonathan D Ostry at a press briefing.

The IMF said although a recovery is currently underway, and the pandemic is receding in some countries, elsewhere, second or third waves of infections are raging, notably in India plus some of the ASEAN economies.

"Outlooks in the Maldives, Nepal, and Sri Lanka are damaged by weak tourism and limited policy space," said Ostry.

The IMF predicted that regional growth will be just above 7.5 percent this season.

Jonathan said recovery in Asia is determined by a smooth handoff from public support to private demand.

"Following the historically unprecedented stimulus in 2020, fiscal policy in the region is expected to continue to do its part this season, with the fiscal stance remaining supportive in your community," he said.

The IMF suggested accommodative fiscal support, targeted towards vulnerable groups, until private demand recovers.