The International Monetary Fund (IMF) projected mere 5.4% growth of Gross Domestic Product (GDP) in the current fiscal year, 0.42 percentage points lower than the provisional estimate 5.82% by the Bangladesh Bureau of Statistics (BBS).
The projected growth is lowest in the last four fiscals following quarter century lowest growth in the FY 2019-20 due to adverse impact of Covid-19.
The projection came with a publication of the IMF to disclose the approval of the third tranche worth $1148 million of the IMF loan signed earlier.
Besides, the GDP growth target, the goal of controlling the prices of daily commodities is also not being met, according to the IMF.
The global lender projected an average inflation of 9.4% in the current fiscal year ending June 30.
The government set a target of 6% inflation at the beginning of the fiscal and it later revised to 8%.
The projected inflation by the IMF is 1.4 percentage points lower than the government revised target announced with the budget speech for the next fiscal.
The consumer price index report of the Bureau of Statistics found a 9.73% moving average inflation for the last twelve months.
The average inflation could not be managed as low as the government target level even at the IMF projection level.
The IMF report clarified the projection of lower GDP growth and higher inflation and revealed the real GDP growth slowed to 4.8% in the first half of the fiscal year, while headline inflation reached a decade high of 9.7% year-on-year in April.
The real GDP growth is projected at 5.4% in FY24, owing to the ongoing import compression and policy tightening.
Inflation is projected to remain elevated at approximately 9.4% in FY24, the report added.
The IMF projected 6.6% GDP growth for the next fiscal very close to the government target of 6.75%.
Whatever it projected a moderate 7.2% inflation rate a 0.70 percentage points higher than the government target 6.75%.
The report revealed that the growth will pick up to 6.6% in FY25 as imports rebound and ease pressures on foreign exchange.
The rate of inflation will be in FY25, on the back of the continued tighter policy mix and projected lower global food and commodity prices, the report revealed.
It also said that the gross international reserves (GIR) are projected to gradually increase following the exchange rate realignment.
The report found some challenges for the economy in the near future and revealed Bangladesh is also susceptible to global risks related to geopolitical conflicts, geo-economic fragmentation and disruptions in supply of commodities.
If such risks materialize, they may lead to a deterioration of the current account, additional fiscal burden, higher inflation, and constitute a drag on activity, leading to further squeezing of the already limited policy buffers, including foreign exchange reserves, it added.
The report also praised the current exchange rate policy of the Bangladesh Bank and said the realignment of the exchange rate and the implementation of the new exchange rate arrangement have reduced the risks to macroeconomic stability emanating from the loss of FX reserves and dysfunction of the FX market.
Without this effort, risks of disorderly adjustments would have remained high, potentially leading to further exchange rate depreciation and subsequent inflation, requiring an even stronger policy adjustment down the road, it added.
Antoinette M. Sayeh, deputy managing director of the IMF stated that Bangladesh's economy faces macroeconomic challenges, but program performance is on track.
She said in a statement that the IMF-supported program aids macroeconomic stability, protects the vulnerable, and promotes inclusive and green growth.
She said that policies should focus on external resilience and reducing inflation, with further tightening if necessary.
