Bangladesh Quarterly Economic Update (September 2008) | Asian Development Bank

Bangladesh Quarterly Economic Update (September 2008)

Institutional Document | September 2008

The Bangladesh Quarterly Economic Updates provide recent economic data about the economy in Bangladesh. This issue includes economic data up to September 2008.

Bangladesh's growth performance has been remarkably resilient despite multiple natural disasters and some erosion in business confidence. Real GDP growth in FY2008 remained strong at 6.2%, supported by a strong pickup in domestic economic activity in the second half of FY2008 and rapid growth in garment exports and remittance inflows. Before the onset of the global financial crisis, a 6.5% growth target for FY2009 appeared reasonable. But as the financial crisis in the advanced economies unfolds and recession sets in, the FY2009 growth projections for Bangladesh will likely need to be adjusted downward to between 5.5% and 6.0%, taking into account the likely effects on external and domestic demand. Although exports and remittances are unlikely to be hard hit at the beginning of the financial crisis, they may slow somewhat.

The drop in consumer spending in importing countries, because of income loss and looming economic uncertainties, will have moderating effects on demand for textiles (76% of Bangladesh’s exports), and more pronounced impacts on high-end products such as frozen foods and leather products, which together make up the bulk of Bangladesh’s exports. Possible moderation in remittance flows will also affect growth by reducing domestic consumption and investment demand.

Highlights

  • Macroeconomic outlook for FY2009 remains generally favorable with reasonable growth prospects and stable external balances.
  • Gross domestic product (GDP) growth projected at 5.5% to 6.0% in FY2009.
  • Export and remittance growth may slow, but should remain reasonably robust in the absence of a deep and prolonged global recession.
  • Because of its limited exposure, the financial sector including the domestic capital market will remain largely unaffected by the global financial crisis.
  • Revenue outturn will remain robust unless economic activity and imports experience a major slowdown.
  • Inflation will remain within the earlier projected 9%.
  • Pressures on the current account will remain manageable and foreign reserves comfortable.

Contents 

  • Macroeconomic Developments
    • Sector Performance and Economic Growth
    • Inflation
    • Fiscal Management
    • Monetary and Financial Developments
    • Balance of Payments
    • Exchange Rate
    • Capital Market
  • Climate Change, A Development Challenge for Bangladesh: Measures for Adaptation and Mitigation
    • Major Climate-Induced Disasters and Their Impacts
    • Geophysical Causes of Vulnerability
    • Possible Future Episodes of Climate Change
    • Economic Effects of Climate Change
    • Options for Tackling Climate Change and Variability