Bangladesh Economic Outlook
In FY 2023 (July 2022–June 2023), Bangladesh notched one of Asia’s fastest growth rates, according to a provisional estimate by the statistical office. That said, the growth rate was softer than in the prior fiscal year, with private spending, fixed investment and exports all expanding more slowly. Additionally, the statistical office could revise down the FY 2023 growth rate ahead due to a power crisis at the tail-end of the fiscal year. Heading into FY 2024, merchandise exports rose 9% year on year in July–August, up from the 7% expansion seen in FY 2023. In August, Prime Minister Sheikh Hasina Wajed unveiled Bangladesh’s first universal pension program. In the short term, the program should help cement the ruling party’s victory in elections due in January 2024. In the long term, the program may strain the fiscal balance given its wide coverage and a rising life expectancy.
Inflation rose to 9.9% in August (July: 9.7%). After remaining roughly stable this calendar year (CY) compared to the prior one, inflation should ease in CY 2024. However, even next year, inflation will remain elevated, with the currency having weakened recently after the authorities loosened controls on the exchange market. Extreme weather is the key upside risk.