Bangladesh Quarterly Economic Update (September 2011) | Asian Development Bank

Bangladesh Quarterly Economic Update (September 2011)

Institutional Document | September 2011

The Bangladesh Quarterly Economic Updates provide recent economic data about the economy in Bangladesh. This issue includes economic data up to September 2011.

Bangladesh’s near term growth prospects will depend critically on how exports and remittances—the country’s two main growth drivers perform in the face of the uncertainty in the global economy. Export growth has been slower in the first 4 months of FY2012 compared with the year earlier period reflecting the delay in US economic recovery and unfolding debt crisis in the eurozone countries although the decline in raw material prices including that of cotton, also contributed. The pace of remittance growth has also been slowing, especially from the US and United Kingdom. In addition, the credit tightening measures by the central bank and the continuing volatility in the stock market are likely to dampen domestic demand. The rapid growth in government bank borrowing in the face of an overall tighter credit environment will mean slower growth of credit to the private sector, affecting industrial production. The prevailing inflationary expectations are likely to discourage investment, and also impinge on growth prospects by affecting labor demand as wage pressures are built up. The growing pressure on the foreign exchange reserves may lead to lower imports, essential for expanding industrial production. The lower aid disbursement will likely affect project implementation, depressing aggregate demand.

Highlights

  • Macroeconomic management came under pressure in the first quarter of FY2012, with inflation rising rapidly, a sharp rise in government borrowing from the banking system, and growing pressure on foreign exchange reserves and exchange rate.
  • Inflation, year-on-year, reached 12.0% in September 2011.
  • Fiscal management faces challenges, with inadequate revenue resources, decline in aid absorption, and growing subsidies financed by higher bank borrowing.
  • Greater coordination among monetary, fiscal, and exchange rate policies is essential for addressing macroeconomic challenges.
  • Removing infrastructure shortages remains a major challenge.

Contents 

  • Macroeconomic Developments
    • Highlights
    • Sector Performance and Economic Growth
    • Inflation
    • Fiscal Management
    • Monetary and Financial Developments
    • Balance of Payments
    • Exchange Rate
    • Capital Markets
  • Enhanding Gender Equity in ADB's Bangladesh Operations
    • Gender Status and Key Challenges
    • The Government's Gender Strategy
    • ADB and Other Development Partner Experience
    • ADB's Gender Strategy