The World Bank (WB) projected Bangladesh's annual economic growth to slow down to 6.4 per cent in 2018, on top of an already-downward forecast of 6.8 per cent growth for the current year.
It says: "Growth will be sustained at 6.8 per cent in 2017, compared with the officially reported 7.1 per cent in 2016 and with a decelerating inflation rate and a budget deficit that has narrowed."
However, the country's growth is likely to see slight upward trend of 6.7 per cent in 2019, the multilateral funding agency forecast in its latest biennial report on South Asian region.
The WB forecast is part of its biennial report titled 'South Asia Economic Focus' which, in its latest edition, explores whether South Asian countries should worry about mounting protectionist pressures.
According to the report, Bangladesh is the only country in South Asia which is predicted to have a lower economic growth in 2017 than the previous year.
Bangladesh's giant neighbour India, for example, is expected to grow at a rate of 7.2 per cent in 2017, after expanding by a slightly lower than expected 6.8 per cent in 2016, with a temporary disruption from the withdrawal of large- denomination banknotes.
Based on tangible improvements in security, Pakistan also continues its uptrend, the report noted, and growth is expected to accelerate to over 5.0 per cent this year. Nepal and the Maldives are also bouncing back from economic shocks, it said.
Regarding Bangladesh, WB noted that the country has weathered global uncertainties well aided by the strengthening of investment and a recovery of exports. The country's industrial production reached a record high recently, and growth remained strong, the report said.
Nevertheless, it also pointed out that infrastructure gaps and inadequate energy supply, combined with high cost of doing business, remain the main obstacles to the realisation of Bangladesh's growth potential.
The Washington-based global lender, in its latest report on South Asia, themed Globalisation: Backlash, also predicts that this region would be resilient to higher trade barriers in advanced economies.
"It would even stand to gain if selective protectionism resulted in trade diversion away from established suppliers," the World Bank observations says, adding: "South Asian economies also stand to gain from the observed recovery in advanced economies, which are their largest export markets."
The report also affirms that South Asia remains the fastest-growing region in the world, gradually widening its lead relative to East Asia as regional GDP growth is expected to rise from 6.7 per cent in 2016 to 6.8 per cent in 2017, and 7.1 per cent in 2018.
"Simulations on the impact of hypothetical new trade barriers show that South Asia is not only resilient to a potential rise in protectionism but could possibly even gain from it in some circumstances," said Annette Dixon, the World Bank South Asia Region Vice President.
He noted that advanced economies are recovering and could see faster growth that is likely increase demand for South Asian products.
"The region should seize this opportunity to diversify its exports and enhance its supply response. This could create a substantial number of jobs for new entrants to the labour force," said the WB vice-president for the region.
Analysis of different hypothetical trade scenarios finds that South Asia stands to benefit from the stall of large regional trade agreements such as the Trans-Pacific Partnership (TPP), the WB report said.
It would also gain in the hypothetical scenario of greater protectionism against major exporting countries such as China and Mexico.
The WB research finds that South Asia growth is highly responsive to higher growth in advanced economies, which could offset potential losses from changes in trade policy.
"To make the most of this export opportunity, countries in the region should continue to focus on policies that promote economic growth," said WB South Asia Region Chief Economist Martin Rama.
"A survey of South Asian experts conducted for this report reveals a strong consensus on the need to promote human capital accumulation, investments in infrastructure, and a more business-friendly environment," he added.