Bangladesh Quarterly Economic Update (December 2010) | Asian Development Bank

Bangladesh Quarterly Economic Update (December 2010)

Institutional Document | December 2010

The Bangladesh Quarterly Economic Updates provide recent economic data about the economy in Bangladesh. This issue includes economic data up to December 2010.

Bangladesh has better growth prospects in FY2011. Strong performance of export and allied economic activities are expected to push up gross domestic product (GDP) growth. This will be partly moderated by the fall in the growth rate of remittance inflows, dampening private consumption. The cautious monetary policy adopted by the central bank may, in addition, affect private credit flow, although fiscal incentives offered in the FY2011 budget are likely to have a positive impact on domestic production. GDP in FY2011 is thus expected to grow by 6.3%, 0.5 percentage points higher than in FY2010. Further acceleration in GDP growth will require a significant increase of investment, both private and public, in power, gas, communications, and transport. Attaining the medium-term target of 8% GDP growth will require increasing fixed investment. While the government has taken a few speedy and short-term measures for power generation, the effectiveness of addressing infrastructure shortages will have a major impact on GDP growth performance.

Highlights

  • Growth in GDP will be higher in the current fiscal year with exports maintaining robust growth as the year unfolds.
  • Rising food prices are a major concern, causing hardships for the poor and vulnerable.
  • High growth in broad money and private sector credit, together with the rapid rise in international commodity prices, is fueling inflation.
  • Credit tightening to rein in inflation will take time to take hold as monetary policy works with long and variable lags.
  • A sharper slowdown in remittance growth could affect GDP growth by depressing domestic demand.
  • Export and import growth remained strong during the first half of FY2011.
  • The external current account balance and foreign reserves are likely to come under pressure.
  • Strong performance of revenue collection continues, although annual development program spending did not pick up despite measures to boost implementation.

Contents 

  • Macroeconomic Developments
    • Highlights
    • Sector Performance and Economic Growth
    • Inflation
    • Fiscal Management
    • Monetary and Financial Developments
    • Balance of Payments
    • Exchange Rate
    • Capital Markets