RMG workers in Bangladesh are risking their lives by going about their job amid the coronavirus pandemic to keep the wheels of the economy rolling. The Civil Engineers Limited, an apparel factory in Dhaka’s Tejgaon, has taken a distinct initiative to protect its workers from the coronavirus. Photo: Kazi Salahuddin

Economic growth prospects improved in Bangladesh, supported by returning readymade garment demand from abroad, the World Bank said in a new report, as it kept up its forecast upgrades for this fiscal year and the next.

Strong export growth and a rebound in domestic demand — with improving labour income and remittance inflows — supported the country’s economic recovery.

Rising services activity and firming exports of readymade garments will support private consumption, the main engine of growth, in Bangladesh, the global lender said in its latest Global Economic Prospects report on Tuesday.

It kept the GDP growth projection unchanged at 6.4 percent in FY22 and 6.9 percent in FY23.

The report said Bangladesh saw its trade deficit widen to a record level on strong domestic demand and rising energy prices.

Growth prospects have improved in South Asia since June 2021, reflecting forecast upgrades for Bangladesh, India and Pakistan.

Output losses compared to pre-pandemic trends remain significant in the region. Fiscal policy will support growth, but unwind, over the forecast horizon. Per capita income growth continues to catch up to advanced-economy levels, but at about half the pace prior to the pandemic.

Overall, the global economy is entering a pronounced slowdown amid fresh threats from COVID-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies following a strong rebound in 2021, the World Bank said.

Global growth is expected to decelerate markedly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.

“The world economy is simultaneously facing COVID-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries,” said World Bank Group President David Malpass. “Putting more countries on a favourable growth path requires concerted international action and a comprehensive set of national policy responses.”

The slowdown will coincide with a widening divergence in growth rates between advanced economies and emerging and developing economies.

Growth in advanced economies is expected to decline from 5 percent in 2021 to 3.8 percent in 2022 and 2.3 percent in 2023—a pace that, while moderating, will be sufficient to restore output and investment to their pre-pandemic trend in these economies.

In emerging and developing economies, however, growth is expected to drop from 6.3 percent in 2021 to 4.6 percent in 2022 and 4.4 percent in 2023. By 2023, all advanced economies will have achieved a full output recovery; yet output in emerging and developing economies will remain 4 percent below its pre-pandemic trend.

For many vulnerable economies, the setback is even larger: output of fragile and conflict-affected economies will be 7.5 percent below its pre-pandemic trend.

Meanwhile, rising inflation—which hits low-income workers particularly hard—is constraining monetary policy.

Globally and in advanced economies, inflation is running at the highest rates since 2008. In emerging market and developing economies, it has reached its highest rate since 2011.

Many emerging and developing economies are withdrawing policy support to contain inflationary pressures—well before the recovery is complete.

“The choices policymakers make in the next few years will decide the course of the next decade,” said Mari Pangestu, the World Bank’s Managing Director for Development Policy and Partnerships.

“The immediate priority should be to ensure that vaccines are deployed more widely and equitably so the pandemic can be brought under control. But tackling reversals in development progress such as rising inequality will require sustained support,” she said.

“In a time of high debt, global cooperation will be essential to help expand the financial resources of developing economies so they can achieve green, resilient, and inclusive development.”

Source: bdnews24.com