Bangladesh's exports to keep boosting economic growth
A recent report by BMI, a data and analytics provider under Fitch Solutions, suggests that Bangladesh's exports will continue to be a driving force behind its economic growth in the near term, despite challenges such as high inflation, a depreciating taka, and import restrictions impacting consumption and private investment.
The report highlights a shift in consumer spending patterns due to the weak macroeconomic environment and decreased purchasing power. Consumers are reportedly turning towards lower-priced items, favoring low-wage producers like those in Bangladesh. This shift has positively impacted Bangladesh's exports, particularly in the garment sector, known for its competitiveness in the global market.
Notably, Bangladesh's net exports, historically in the negative, have seen improvement, reaching $3.9 billion in the negative, a significant shift from the average negative net exports of $8.1 billion since FY2017-18.
The report emphasizes that despite challenges, Bangladesh's trade deficit has narrowed in recent months, even compared to pre-pandemic levels. In the second half of 2021-22, net exports hit a low of negative $15.1 billion.
The devaluation of the Bangladeshi taka has been cited as a factor sustaining the country's export competitiveness and contributing to the growth in net exports. This depreciation is expected to keep export growth elevated in the foreseeable future.
While the BMI report projects Bangladesh's economy to grow by 5.4 percent year-on-year in 2023-24, this forecast is slightly lower than the estimate provided by the Bangladesh Bureau of Statistics (BBS), which stands at 5.78 percent. Additionally, BMI's prediction falls below forecasts made by institutions like the World Bank and the International Monetary Fund (IMF). The World Bank projected a GDP growth of 5.6 percent for Bangladesh in FY24, while the IMF forecasted a growth rate of 6 percent.
Despite these projections falling below pre-Covid growth rates, which averaged 6.6 percent in the decade leading up to the pandemic, BMI's report underscores the resilience of Bangladesh's export sector in driving economic growth amidst challenging global economic conditions.
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