Inflation to be 8.60 percent
Mahfuz Emran: The dollar crisis may be increased in the coming days as the export earnings declining every month. Though the remittance inflow increased in April due to the Eid festival but the overall situation has not improved.
The International Monetary Fund (IMF) has kept the growth rate of Bangladesh unchanged despite the reduction in the global GDP growth rate. Although the World Bank and Asian Development Bank have reduced the global growth rate with the growth of Bangladesh. According to IMF, the GDP growth of Bangladesh will be 5.5 percent in the current financial year. In October last year as well, the organization predicted that Bangladesh’s growth rate would be 5.5 percent.
The organization also said that the average inflation rate of Bangladesh in the current financial year may be 8.6 percent. In the next year, it may decrease to 6.5 percent. And the growth rate may increase to 6 and a half percent. However, the deficit in terms of foreign exchange income and expenditure will decrease in the current year but will increase in the next year. As a result, the dollar crisis will increase in the coming year. This information has been given in the IMF’s ‘World Economic Outlook April 2023’ report published recently.
The IMF has said several positive things about Bangladesh in the report. According to the organization, the ongoing crisis of foreign exchange in Bangladesh will gradually decrease. As a result, current account deficit of foreign currency (account of foreign exchange income and expenditure) will be 2 tenths of 1 percent of GDP this year.
Last year the deficit in this sector was 4.1 percent of GDP. Compared to the last financial year, the deficit in this sector will be reduced by half in the current financial year.
According to the IMF report, this deficit will increase to 4.2 percent of GDP in the next financial year. Which is twice more than the current financial year. That is the highest deficit in the history of Bangladesh. A deficit this high means spending will exceed dollar income that year. As a result, the current account deficit will increase.
According to a report of Bangladesh Bank, Bangladesh will have to repay the largest foreign debt in the next financial year. And the IMF has said that remittances will decrease in the next financial year. Imports will increase due to increase in GDP. This will increase the pressure on foreign exchange. Due to which the deficit in terms of foreign exchange income and expenditure will increase and reach a record high. This will be the maximum deficit.
According to sources, Bangladesh received $470 million for the first installment of $4.7 billion loan from the IMF last February. Due to this, the reserves increased slightly. Now it has started to decrease again.
Meanwhile, in the current financial year, the growth rate of GDP in Bangladesh has been reduced by 1.3 percent in six months. The organization said last October that the growth of Bangladesh will be 6.6 percent in the current financial year. But in April, it reduced it to 5.3 percent. The World Bank said last June that Bangladesh’s growth this year will be 6.7 percent. In April, it cut it to 5.2 percent.
Due to the global recession, reduced demand in the export market and contractionary monetary policy, there is stagnation in the economic activities of Bangladesh. Due to this, the growth rate will decrease, the two organizations said.
According to the report published by the IMF, the growth of world GDP this year will be 2.8 percent. This is the lowest in the last 30 years. Last January, the IMF said growth would be 2.9 percent. Within three months, this rate was reduced to 1.1 percent. Next year it will increase slightly to 3 percent growth. Three months ago, it was said that next year the global growth will be 3.1 percent. The growth rate was reduced due to the global recession.
Bhutan’s growth this year may be 4.7 percent. Maldives may be 7.2 percent. 2.6 percent of Myanmar. 4.4 percent of Nepal. Sri Lanka’s growth in 2021 was 3.3 percent. Growth has not picked up in the past year. On the contrary, it was negative by 8.7 percent. 3 percent will be negative this year.
US growth last year was 2.1 percent. This time it will be reduced to 1.3 percent. In the European region last year, it was 3.5 percent. This time it will decrease to 0.8 percent. Last year the UK’s growth was 4 percent this year it will drop to negative 3.3 percent.
Note that these countries are the main export markets of Bangladesh. Bangladesh’s export earnings will be negatively affected due to the decline in growth in these countries.
According to the IMF report, China’s growth last year was 3 percent. This time it will increase to 5.2 percent. India’s growth last year was 6.8 percent. This time it can be reduced to 5.9 percent. Last year the global inflation rate was 8.7 percent. This year it may come down to 7 percent.
A new concern is rising interest rates, the IMF said. Central banks have already raised policy interest rates to 50 percent or more. Commercial banks have also started raising interest rates due to central bank raising interest rates. This will discourage investment. Because the cost of borrowing from banks and financial institutions will increase due to increase in interest rates.
It is known that the policy interest rate has already been increased three times in Bangladesh. Banks have also started raising interest rates. This rate will increase from next July. Then the cost of the loan will also increase.
Staff Correspondent: The International Farakka Committee (IFC) is deeply saddened by the s…