South Asia Economic Focus, Making (De)Centralization Work Report: World Bank

As per the report released by World Bank on ‘South Asia Economic Focus, Making (De)Centralization Work’, Bangladesh has become the second-fastest growing economy in South Asia after Bhutan. According to the World Bank, Bangladesh and Nepal are estimated to grow faster than India in 2019.

The latest edition of this World Banks’s report finds that strong domestic demand, which support high growth in past, has weakened, driving a slowdown across the south Asian region.

Key Highlights of Report

The overall growth in South Asia is projected to slow down this fiscal in line with a global downward trend. Growth in South Asia is projected to fall to 5.9% in 2019, down 1.1% points from April 2019 estimates, casting uncertainty about a rebound in short term.

In India, growth is projected to fall to 6% this fiscal year and is then expected to gradually recover to 6.9% in fiscal year 2021 and to 7.2% in 2022.

The growth rate of Pakistan is projected to decrease further to 2.4% this fiscal year, as monetary policy remains tight, and planned fiscal consolidation will further compress domestic demand.

As per the report, the GDP growth rate of Bangladesh is projected to moderate to 7.2% this fiscal year and 7.3% in 2020. The country’s economy is likely to maintain growth above 7%, supported by a political stability, robust macroeconomic framework, and strong public investments.

In 2018 Bangladesh has reduced current account deficit due to rising export and remittances which was above $15.5 billion. However, the report indicates that the financial sector vulnerability, fiscal pressures and loss of external competitiveness pose challenges to its growth rate.

Moreover, despite slowdown in industrial growth rate, the industrial sector remains strong as Bangladesh’s garment industry benefited immensely from trade tensions between United States and China.

The World Bank report suggests Bangladesh to address key structural challenges such as reducing infrastructure deficit, improving urban management, managing climate change risks and enhancing human capital.

Month: Current Affairs - October, 2019