Bangladesh, severely affected by the Covid-19 pandemic, will have a “modest economic recovery” with a 6.4 per cent growth for the fiscal year 2021-22, which is 1.3 per cent higher than its earlier projection, says a World Bank (WB) forecast. Earlier, it projected the country’s gross domestic product (GDP) at 5.1 per cent for the current fiscal ending in June 2022. In the update of its latest South Asia Economic Focus titled “Shifting Gears: Digitalisation and Services-led Development”, the Washington-based global lender in a report on Wednesday said continued recovery in exports and consumption in Bangladesh will help growth rates pick up in the current fiscal. It further said the economic recovery is expected to gradually accelerate, if the supply of vaccines rises and the economic scarring effects of the pandemic can be contained. The government, meanwhile, has set a growth target of 7.2 per cent for FY22.
Economists have identified structural weaknesses, which include low institutional capacity, highly concentrated exports, growing financial sector vulnerabilities, unbalanced urbanisation and slow improvements in the business environment as major challenges for Bangladesh’s further development. The government’s Covid-19 stimulus programme provided firms with access to working capital and low-cost loans to sustain operations and retain employees, but funding to smaller firms and the informal sector has been limited. Besides, expected graduation from the UN’s Least Developed Country (LDC) status in 2026 will present opportunities as well as challenges, including the eventual loss of preferential access to advanced economy markets.
To realise the potential of the services-led development, Bangladesh needs to establish new institutions to support innovation and competitiveness. Covid-19 has left long-term scars on our economy, the impacts of which can last well into the recovery. With the emergence of new digital technologies, Bangladesh has an opportunity to shift gears from a traditional manufacturing-led growth model and capitalise on the potential of its services sector. We are encouraged to see clear signs of an economic rebound in Bangladesh, but the pandemic is not yet under control and the recovery remains fragile. So we need to ramp up our vaccination programme to set up the foundation of a more inclusive and resilient future.
