DHAKA, June 26, 2024 (BSS) - The International Monetary Fund (IMF) has projected the Gross Domestic Product (GDP) growth for Bangladesh at 6.6 percent for the upcoming fiscal 2024-25 (FY25).

The projection of the global lender nears the Bangladesh government’s projection for the next fiscal.

The government is eying attaining a GDP growth target of 6.75 percent in the next fiscal year (FY25).

Talking to BSS, Chris Papageorgiou, IMF Mission Chief for Bangladesh, said Bangladesh’s economy faces multiple challenges as external shocks and global uncertainties have amplified macroeconomic vulnerabilities.

“Growth momentum has moderated over the past year and a half due to higher inflation eroding consumer’s purchasing power, tighter fiscal and monetary policies required to tame inflation, and foreign exchange shortages and import restrictions further limiting aggregate demand. Nonetheless, exports—an important driver of Bangladesh’s economy—have remained relatively resilient,” he added.

He said the near-term growth trajectory will depend on timely resolution of issues such as heightened inflation and external imbalances.

This would allow for a shift to a more accommodative policy stance, he added.

According to staff’s projections, he mentioned, Bangladesh’s economy may grow at a slower rate of 5.4 percent in FY24, compared to the rate a year ago.

“However, we anticipate stronger growth at 6.6 percent in FY25 as the domestic macroeconomic outlook and external position gradually stabilize,” he added.

In the longer term, he said, maintaining high-paced growth will crucially depend on the consistent implementation of structural reforms to improve the business climate.

Priorities in the reform agenda should therefore include expanding and diversifying foreign trade, attracting foreign direct investment, improving governance, strengthening the financial sector, mobilizing fiscal revenue, and developing infrastructure, he added.

Chris Papageorgiou, however, said over the past decade, Bangladesh has achieved impressive economic growth and social development, making steady progress in reducing poverty and across many Sustainable Development Goal (SDG) indicators.

To successfully graduate from Least Developed Country (LDC) status and achieve upper-middle-income status, he said, it is crucial to build on these successes and address structural issues to accelerate growth, attract private investment, enhance productivity, and build climate resilience.

Given this background, he mentioned, the short-term priority should be creating an enabling environment to further expand trade and attract foreign direct investment.

This includes reducing the relatively high non-tariff barriers, improving trade-related physical infrastructure, and removing regulatory obstacles, he added.

Since Bangladesh’s trade profile has remained relatively unchanged over the past decades, he said, the medium- and long-term priorities should focus on diversifying the concentrated export and product portfolios.

“While the ready-made garment industry has significantly contributed to the country's economic growth, it is essential to diversify exports beyond this sector. The authorities should explore new drivers of growth, such as initiatives supporting a green transition, to achieve this goal,” he added.