Troubled waters lie ahead of Bangladesh as it continues to struggle with high inflation risk alongside foreign exchange, energy and geopolitical crises and a weak global economy, but the lion’s share of respondents in a survey still believe that the country can achieve a 5-6 per cent GDP growth in FY2022-23.
However, the projection is still lower than the government’s revised GDP growth target of 6.5 per cent for FY23. At the beginning of the ongoing fiscal year, the government had set 7.5 per cent as thtarget but it was lowered in January.
Achieving 5-6 per cent growth may be possible if the global economic situation improves further and Bangladesh can retain the export and remittance inflow growths, says the findings of a recently conducted survey.
The online survey was conducted from January 1 to February 10 this year among 101 people from different milieus including people from the financial sector, service holders, businessmen and students.
According to the survey, 20.8 per cent of respondents said GDP growth will be 4-5 per cent while 39.6 per cent expects the growth will be 5-6 per cent. Only 4 per cent of respondents believe growth will be above 7 per cent.
The survey, titled “The Bangladesh Capital Market Sentiment Survey 2023,” was conducted by LankaBangla Securities Ltd.
In it, inflation emerged as the biggest risk for the economy. The government had set a 5.6 per cent inflation target for FY23. The inflation rate was 8.78 per cent in February.
Some 67 per cent of respondents identified inflation as the biggest risk and most of them believe inflation will go up in the coming days.
Following that, 65 per cent of respondents identified the banking sector crisis as another biggest risk. The foreign exchange crisis was also highlighted as the same by 56.40 per cent of respondents.
Moreover, the energy crisis, weak global economy and Russia-Ukraine war were considered as major risks by 43.6 per cent, 46.5 per cent and 34.7 per cent of respondents, respectively.
Some 50.5 per cent believe that Bangladesh’s economy will face pressure if volatility in global crude oil prices continues and 74.3 per cent believe electricity and gas prices have worsened.
With the national elections likely to be held at the end of 2023 or the beginning of 2024, political turmoil ahead, during and after the polls could also pose a risk to the economy — said 38.6 per cent of respondents, according to the survey.
Other risks include poor private sector credit growth, fiscal management, weak exports, low remittance inflows and lockdown due to new Covid-19 variants.
As the economic situation is not at its greatest now, 58.4 per cent of respondents think the foreign investment will decrease in 2023.
The survey report also highlighted that a staggering 86.1 per cent of respondents feel that the increase in digitalisation will have a positive impact on the economy.Around 50.5 per cent of respondents believe that structural reform in the National Board of Revenue (NBR) is needed to improve its tax collection process.
According to the International Monetary Fund’s (IMF) World Economic Outlook 2022 report, Bangladesh has the lowest tax-GDP ratio — 9.61 per cent — in the Asia region.
Most of the survey’s participants — 60.4 per cent — think that the $4.7 billion loan from IMF will be beneficial for Bangladesh.
Meanwhile, the country’s current account deficit was $5.03 billion during July-January of FY23, which was $10.26 billion in the same period of FY22, according to Bangladesh Bank.
Despite the improvement and help from IMF, 73.3 per cent of the survey’s respondents think the current account balance will be in the negative in FY23, said the report.
Some 58.4 per cent of participants said a possible downgrade by Moody’s in sovereign credit rating will also have a significant negative impact on the country’s economy.
