Dhaka: Bangladesh's economy will grow by 6.8 percent in the current fiscal 2016-17, down from the government target of 7.2 percent, says the World Bank, reports UNB.
"Bangladesh's growth is expected to ease to a still solid 6.8 percent in FY2017 (ending on 30 June 2017), from the official estimate of 7.1 percent in the previous fiscal year," said the World Bank's January 2017 Global Economic Prospects report released on Tuesday.
The report said domestic security challenges compounded weak external demand and a mild pickup in private investment, offsetting an uptick in infrastructure spending and increased public sector wages in the first half of the current fiscal.
Besides, a slowdown in oil-rich Gulf Cooperation Council (GCC) economies has led to receding remittances inflows to Bangladesh, dampening private consumption and investment, it noted.
Weak remittances inflows and subdued consumption are foreseen to weigh on Bangladesh’s growth, projected to edge down to 6.5 percent in FY2018, but rebound to 6.7 percent in FY2019 and 7.0 percent thereafter in the forecast horizon, supported by infrastructure spending and a pickup in exports, the World Bank report said.
An improved security situation is also expected to attract private investment and FDI. Construction of Padma Bridge connecting southwest of the region with the rest of the county and a liquefied natural gas terminal will alleviate infrastructure and energy bottlenecks in the medium-term, it said.
However, Bangladesh's high recurring expenditures and a stagnant revenue-to-GDP ratio will likely pose obstacles to the funding of needed infrastructure development, the global lender said.
About the global economy, the World Bank's report said the global economic growth is forecast to accelerate moderately to 2.7 percent in 2017 after a post-crisis low last year as obstacles to activity recede among the emerging market and developing economy commodity exporters, while domestic demand will remain solid among emerging and developing commodity importers.
Growth in advanced economies is expected to edge up to 1.8 percent in 2017, it noted adding that fiscal stimulus in major economies —particularly in the United States— could generate faster domestic and global growth than projected, although rising trade protection could have adverse effects.
"After years of disappointing global growth, we’re encouraged to see stronger economic prospects on the horizon," World Bank Group President Jim Yong Kim said.