Asian Development Bank (ADB) has said that the economy of Bangladesh will continue as the fastest growing economy in Asia during the ongoing fiscal year 2019-20.
ADB Country Director Manmohan Parkash said this while releasing the ‘Asian Development Outlook 2019 Update: Fostering Growth and Inclusion in Asia’s Cities’ held at its office in the city’s Agargaon area.
“However, such momentum needs to be sustained in the medium-to-long-term to achieve its goal of becoming an upper middle-income country and high-income country,” Manmohan said.
Soon Chan Hong, Senior Economist of ADB, made a power-point presentation on the occasion.
The ADB Country Director further said that Bangladesh’s economy is in a good shape and is likely to continue to grow.
Ongoing reforms to improve the cost of doing business, including the establishment of one-stop service for private investments, and stepped up budget spending, especially to develop infrastructure, will help to boost the growth, the development outlook report said.
On the supply side, sustained strong growth in industry and agriculture are expected to be the main drivers of growth in the fiscal year 2020, it said.
Despite a weaker global growth, favourable trade prospects are expected to continue, the outlook added.
If the GDP growth continues, Bangladesh is likely to be the fastest growing economy in Asia Pacific, Manmohan said.
Furthermore, the authorities must speed up reforms to improve the business environment to create a vibrant private sector development, the ADB country director said.
Although the implementation of the VAT law is a welcome development, further expansion of the tax base and promotion of efficient tax administration are required for improved resource mobilization, he said.
He added that Bangladesh also needs to further develop human capital in order to meet the growing needs from private sector.
However, there are several challenges Bangladesh needs to overcome to sustain this momentum in the medium to long-term, ADB report said.
Bangladesh requires expanded industrial base, a diversified export basket, equitable development in urban and rural areas, and a sound financial system, it added.
The ADB Country Director said based on the strong performance of 8.1 percent in the last fiscal year (FY19), the GDP is expected to grow by 8 percent in the current fiscal year (FY20) in Bangladesh.
The update indicated that the growth projection has been downsized at 6
percent for China, 7.2 percent for India, 2.4 percent for Korea, 2.8 percent for Pakistan, 3.2 percent for Thailand.
The ADB update showed that on the supply side, strong expansion in industry and services lifted the robust growth. Pick up in exports due to stronger demand in the US and some newer markets led to the brisk production in large and medium-sized industries.
“The country’s macroeconomic management remains generally sound. Inflation moderated to 5.5 percent. Although budget revenue is expected to underperform its target, the fiscal deficit is expected to remain within the budget target. The current account deficit narrowed due to acceleration in exports and slowing in import demand,” Manmohan said.
He also underscored the need for converting the demographic boom into demographic dividend in Bangladesh besides converting the countrywide 100 special economic zones in such centres where trade redirection benefits flow in to labour-intensive manufacturing industries.