Bangladesh Quarterly Economic Update (September 2009)

Institutional Document | September 2009

The Bangladesh Quarterly Economic Updates provide recent economic data about the economy in Bangladesh. This issue includes economic data up to September 2009.

Although growth decreased to 5.9% in FY2009 from more than 6% on average in the past 5 years, the performance was better than in other Asian countries—reflecting the possibility that the impact on Bangladesh might not have been as severe in the first year. The late unfolding of the impact of the crisis on Bangladesh also indicates that it could be more pronounced in FY2010 before bottoming out in FY2011. Several factors indicate the prospect of lower GDP growth in FY2010, including (i) the slowdown or decline in imports of capital machinery and industrial raw materials, and identical trends in the opening of letters of credit—a leading indicator for growth performance; (ii) slower growth in private sector credit and the consequent accumulation of large excess reserves in banks; and (iii) decline in exports and deceleration in remittance growth and their direct and indirect effects on the economy. In addition, investor sentiment has not fully revived following the initial uncertainty on the extent and depth of the likely impact of the crisis on the Bangladesh economy. The GDP growth rate in FY2010 is thus projected to be 5.2%.

Highlights

  • Macroeconomic management remains prudent.
  • Agriculture growth is likely to moderate in FY2010.
  • A fall in demand, along with prevailing power and energy shortages, is affecting industry sector growth.
  • Services sector growth will moderate due to subdued industrial activity and trade, as well as weaker private consumption.
  • Attaining the FY2010 revenue target will be a challenge given lower imports and subdued domestic economic activity.
  • Implementation of the annual development program needs to be accelerated to increase the country's growth potential.
  • Rising international commodity prices and accumulation of excess liquidity could create inflationary pressures.
  • The current account remains healthy as remittances are holding up coupled with slowing import growth, despite declining exports.

Contents 

  • Macroeconomics Developments
    • Highlights
    • Sector Performance and Economic Growth
    • Inflation
    • Fiscal Management
    • Monetary and Financial Developments
    • Balance of Payments
    • Exchange Rate
    • Capital Markets
  • Impact of the Global Economic Crisis on the Economy and ADB Support for the Government's Response to the Crisis
    • Effects of the Global Economic Crisis
    • Government Response
    • Monetary Stimulus
    • Need for External Borrowing
    • ADB Support for the Government’s Countercyclical Program