IMF halves Bangladesh GDP growth forecast with recovery after September

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The International Monetary Fund has halved the GDP growth forecast for Bangladesh in 2019-20 with economic activities hit hard by the coronavirus pandemic in the next half of the fiscal year.

Gradual recovery is projected to commence in the next quarter of FY21, the global lender said in a written report dated May 21 but published on Jun 3.

GDP growth is projected at 3.8 percent for FY20, about 3.5 percentage points significantly less than the projection the IMF had forecast prior to the pandemic had begun, according to the report.

Bangladesh is exceptional largest one-year decline within the last three decades as the growth is projected to stop by about 4.5 percentage points in accordance with the prior financial year, the report said.

Domestic activity is projected to decline as policies to limit the spread of COVID-19 are implemented and the national shutdown mandated by the government aims to keep persons indoors.

The large share of personnel in the informal sector and in daily paid work indicates a substantial part of the labour force is highly susceptible to the COVID-19 shock.

Despite signs of disruptions in the domestic food supply chain, overall inflation is projected to stay broadly unchanged, owing partly to a bumper harvest in the agriculture sector, the IMF said.

The COVID-19 pandemic is expected to severely affect the Bangladeshi economy. Remittance inflows have previously began to decline in March. Exports also declined sharply in April with cancellation of orders worth several billion US dollars for the main exporting sector - readymade garment.

As a result, an immediate external financing gap around $2.9 billion has emerged along a fiscal financing gap of about $2.8 billion, the IMF said.

To greatly help Bangladesh tackle the coronavirus crisis, the Executive Board of the IMF on, may 29 approved a disbursement of $244 million beneath the Rapid Credit Facility and a purchase of $488 million beneath the Rapid Financing Instrument.

This can help finance the health, social protection and macroeconomic stabilisation measures, meet the urgent balance-of-payments and fiscal needs arising from the COVID-19 outbreak, and catalyse additional support from the international community, the global lender said.
Source: https://bdnews24.com

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