Bangladesh Development Update, October 2018 : Powering the Economy Efficiently

Strong growth, driven by consumption and public investment, has continued. Macroeconomic stability is strained. Inflation has picked up, driven by food price increases initially and by non-food inflation more recently. Notwithstanding rebound in ga...

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Main Author:	World Bank
Format:	Report
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	ECONOMIC GROWTH FINANCIAL MARKETS BALANCE OF PAYMENTS FISCAL TRENDS MONETARY POLICY ELECTRICITY GAS PRICES CROSS-BORDER ELECTRICITY TRADE ECONOMIC OUTLOOK
Online Access:	http://documents.worldbank.org/curated/en/556621538579959997/Bangladesh-Development-Update-Powering-the-Economy-Efficiently http://hdl.handle.net/10986/30565

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spelling	okr-10986-305652021-05-25T09:19:10Z Bangladesh Development Update, October 2018 : Powering the Economy Efficiently World Bank ECONOMIC GROWTH FINANCIAL MARKETS BALANCE OF PAYMENTS FISCAL TRENDS MONETARY POLICY ELECTRICITY GAS PRICES CROSS-BORDER ELECTRICITY TRADE ECONOMIC OUTLOOK Strong growth, driven by consumption and public investment, has continued. Macroeconomic stability is strained. Inflation has picked up, driven by food price increases initially and by non-food inflation more recently. Notwithstanding rebound in garment exports and remittances, the current account deficit has widened significantly because of a surge in imports. A large increase in the disbursement of medium and long-term loans helped contain pressure on foreign exchange reserves and moderate the depreciation of the exchange rate. Monetary growth has been subdued because of decline in public sector borrowing from banks and reduced net international reserves, creating room for increased private sector credit growth. However, weak deposit growth and the persistence of high levels of non-performing loans have led to rise in lending rates. The fiscal deficit has increased despite underspending on public investment as revenue growth fell well short of the budget target. Excessive reliance on expensive saving instruments to finance the budget deficit has continued.Over the near-term, growth is expected to remain resilient, underpinned by strong domestic demand. Inflation is likely to accelerate with rising aggregate demand resulting in part from election related increase in private spending, an expansionary fiscal policy and depreciating exchange rate. The current account deficit and the fiscal deficits are projected to widen, but the risks of both external and public debt distress are low. Downside risks include fiscal slippages aggravated by drying up of assistance for supporting the Rohingyas, delays in banking reforms, loss of monetary policy predictability due to diminished central bank independence and weakening reform momentum in the run-up to the elections. Moving forward, creating more and better jobs by boosting private investments, diversifying exports and building human capital remain the top most policy priorities. In addition to handling macroeconomic imbalances through increased flexibility in the exchange rate and interest rates, this would require ensuring a predictable and efficient system of business regulation, faster progress on the implementation of the mega infrastructure projects, improving financial sector governance, and ensuring an adequate and reliable supply of electricity. 2018-10-15T20:23:38Z 2018-10-15T20:23:38Z 2018-10 Report http://documents.worldbank.org/curated/en/556621538579959997/Bangladesh-Development-Update-Powering-the-Economy-Efficiently http://hdl.handle.net/10986/30565 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work :: Economic Updates and Modeling Economic & Sector Work South Asia Bangladesh
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ECONOMIC GROWTH FINANCIAL MARKETS BALANCE OF PAYMENTS FISCAL TRENDS MONETARY POLICY ELECTRICITY GAS PRICES CROSS-BORDER ELECTRICITY TRADE ECONOMIC OUTLOOK
spellingShingle	ECONOMIC GROWTH FINANCIAL MARKETS BALANCE OF PAYMENTS FISCAL TRENDS MONETARY POLICY ELECTRICITY GAS PRICES CROSS-BORDER ELECTRICITY TRADE ECONOMIC OUTLOOK World Bank Bangladesh Development Update, October 2018 : Powering the Economy Efficiently
geographic_facet	South Asia Bangladesh
description	Strong growth, driven by consumption and public investment, has continued. Macroeconomic stability is strained. Inflation has picked up, driven by food price increases initially and by non-food inflation more recently. Notwithstanding rebound in garment exports and remittances, the current account deficit has widened significantly because of a surge in imports. A large increase in the disbursement of medium and long-term loans helped contain pressure on foreign exchange reserves and moderate the depreciation of the exchange rate. Monetary growth has been subdued because of decline in public sector borrowing from banks and reduced net international reserves, creating room for increased private sector credit growth. However, weak deposit growth and the persistence of high levels of non-performing loans have led to rise in lending rates. The fiscal deficit has increased despite underspending on public investment as revenue growth fell well short of the budget target. Excessive reliance on expensive saving instruments to finance the budget deficit has continued.Over the near-term, growth is expected to remain resilient, underpinned by strong domestic demand. Inflation is likely to accelerate with rising aggregate demand resulting in part from election related increase in private spending, an expansionary fiscal policy and depreciating exchange rate. The current account deficit and the fiscal deficits are projected to widen, but the risks of both external and public debt distress are low. Downside risks include fiscal slippages aggravated by drying up of assistance for supporting the Rohingyas, delays in banking reforms, loss of monetary policy predictability due to diminished central bank independence and weakening reform momentum in the run-up to the elections. Moving forward, creating more and better jobs by boosting private investments, diversifying exports and building human capital remain the top most policy priorities. In addition to handling macroeconomic imbalances through increased flexibility in the exchange rate and interest rates, this would require ensuring a predictable and efficient system of business regulation, faster progress on the implementation of the mega infrastructure projects, improving financial sector governance, and ensuring an adequate and reliable supply of electricity.
format	Report
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Bangladesh Development Update, October 2018 : Powering the Economy Efficiently
title_short	Bangladesh Development Update, October 2018 : Powering the Economy Efficiently
title_full	Bangladesh Development Update, October 2018 : Powering the Economy Efficiently
title_fullStr	Bangladesh Development Update, October 2018 : Powering the Economy Efficiently
title_full_unstemmed	Bangladesh Development Update, October 2018 : Powering the Economy Efficiently
title_sort	bangladesh development update, october 2018 : powering the economy efficiently
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/556621538579959997/Bangladesh-Development-Update-Powering-the-Economy-Efficiently http://hdl.handle.net/10986/30565
_version_	1764472400428138496

Bangladesh Development Update, October 2018 : Powering the Economy Efficiently

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