The Bangladesh economy did better than expected in the last fiscal year, prompting the Asian Development Bank to raise its growth forecast to 6 percent from 5.3 percent.

In an update to its Asian Development Outlook report released on Wednesday, the Manila-based lender said the higher growth estimate reflects strong net exports even as imports fell more sharply than expected.

Manufacturing companies of various scales capitalised on favourable government policies to drive growth on the supply side, according to the report.

Meanwhile, subsidies, incentives, and other measures helped mitigate the impact of crop losses caused by floods, cyclones, and droughts.

The service sector was bouyed by higher warehouse and support activities, as well as enhanced health and social services. On the demand side, public consumption and investment exceeded initial projections, leading to robust growth.

However, the country's growth forecast for FY2024 remains unchanged at 6.5 percent.

The South Asian region also remains on track to achieve the previous ADO growth forecast published in April. The growth projections for Nepal and Pakistan in 2023 have been lowered in light of tighter monetary and fiscal policies, but the upward revision for Bangladesh offset that.

Growth forecasts in other parts of South Asia remain predominantly unchanged in the updated report.

The April forecasts for China, the largest economy in the region, indicateD a growth rate of 5 percent for the current year and 4.5% for the following year. These projections have remained unchanged.

The growth estimates for India, the second-largest economy in the region, have been kept at 6.4 percent for this year and 6.7 percent for the following year based on "upbeat domestic demand".

The ADB is maintaining its growth outlook for developing economies in Asia and the Pacific at 4.8 percent this year, attributing "robust domestic demand" to the region's ongoing recovery.

However, demand for developing Asia’s exports of electronics and other manufactured goods is slowing, as monetary tightening drags on economic activity in major advanced economies, the report said. The region’s growth forecast for next year has been marginally revised down to 4.7 percent from a 4.8 percent estimate in April.

“Asia and the Pacific continues to recover from the pandemic at a steady pace,” said ADB Chief Economist Albert Park.

“Domestic demand and services activity are driving growth, while many economies are also benefiting from a strong recovery in tourism. However, industrial activity and exports remain weak, and the outlook for global growth and demand next year has worsened.”

Meanwhile, inflation is expected to continue falling, approaching pre-pandemic levels as fuel and food prices decline, according to the latest outlook.

Inflation in developing Asia is forecast at 3.6 percent this year, compared with an April forecast of 4.2 percent.

The 2023 inflation forecast for South Asia remains at 8.1 percent, while the 2024 projection revised up markedly to 6.4 percent. Bangladesh is expected to experience higher inflation than previously projected in 2023, along with Nepal.

The projection for India in FY23 was reduced slightly from 5.0 percent to 4.9 percent. The forecast is unchanged at 4.5 percent in FY24.

The inflation forecast for Sri Lanka has been revised down due to declining prices for food, transportation, and utilities, as well as base changes for the consumer price index.

The inflation outlook for 2024, however, has been raised to 3.4 percent from an earlier estimate of 3.3%.

Source: bdnews24.com