Economy may grow at 6.9pc this year: IMF

Dhaka,  Wed,  24 May 2017
Published : 19 Apr 2017, 00:34:30
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Economy may grow at 6.9pc this year: IMF

Meer Saiful Islam


Bangladesh's economy is expected to grow at 6.9 per cent this year, according to a latest report.

The growth in GDP (Gross Domestic Product) is forecast to be even better to grow at 7.0 per cent next year (2018), said the World Economic Outlook (WEO) released Tuesday by the International Monetary Fund (IMF) ahead of the World Bank and IMF's Spring Meetings that begins in Washington DC on Friday.

The WEO projection is, however, not better than the government's target to achieve it at 7.2 per cent in the current fiscal year, but little better than the latest World Bank's projection at 6.8 per cent.

The World Bank's latest forecast on Bangladesh's economic growth for the next year is even gloomier (6.4 per cent) and showed much slower growth rate as compared with that of the WEO.

The WB forecast is a 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.

Recently, Finance Minister AMA Muhith, however, expressed his confidence that the country's GDP growth target for the current fiscal year would be achieved.

He also dropped a broader hint that he would set the GDP growth target for the next fiscal year (2017-18) at 7.4 per cent. His ministry was busy formulating the national budget for the next fiscal year.

According to the WEO, the global economic activity was picking up with a long-awaited cyclical recovery in investment, manufacturing, and trade. The world economy gained speed in the fourth quarter of 2016 and the momentum is expected to persist.

It expected the world growth to rise from 3.1 per cent in 2016 to 3.5 per cent in 2017 and 3.6 per cent in 2018.

Stronger activity, expectations of more robust global demand, reduced deflationary pressures, and optimistic financial markets were all upside developments, it said. But structural impediments to a stronger recovery and a balance of risks that remains tilted to the downside, especially over the medium term, remain important challenges.

The report stressed the need for credible strategies in advanced economies and emerging market and developing ones to tackle a number of common challenges in an integrated global economy.

The WEO said the activity is projected to pick up markedly in emerging market and developing economies because conditions in commodity exporters experiencing macroeconomic strains are gradually expected to improve, supported by the partial recovery in commodity prices.

It, however, underscored the broad stability of growth in low-income countries that are not primarily commodity exporters--a group of countries in which Bangladesh and Vietnam have large weights.

According to the report, emerging market and developing economies have become increasingly important in the global economy in recent years. They now account for more than 75 per cent of global growth in output and consumption, almost double the share of just two decades ago.

Terms of trade, external demand, and, in particular, external financial conditions are increasingly influential determinants of medium-term growth in these economies as they become more integrated into the global economy, it said.

The still-considerable income gaps in these economies vis-à-vis those in advanced economies suggest further room for catch-up, favouring their prospects of maintaining relatively strong potential growth over the medium term.

Yet, the findings show that steady, sustained catch-up growth is not automatic and exhibits episodes of accelerations and reversals over time, said the report.

Moreover, it added, with the global economy in the midst of potentially persistent structural shifts, emerging market and developing economies may face a less supportive external environment going forward than they experienced for long stretches of the post-2000 period.

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