Despite the shocks from the Covid-19 pandemic and its fallout, preliminary estimates suggest that Bangladesh economy has attained around 6.1 percent real GDP growth in FY21, significantly higher than last year's estimated growth of 5.2 percent.
This growth has been supported by healthy growth performances in agricultural and industrial sectors aided by the government and Bangladesh Bank's growth supportive unprecedented policy measures.
On the other hand, the CPI-based average inflation declined to 5.56 percent (against the target of 5.40 percent for FY21) from 5.65 percent in FY20.
What does the Monetary Policy Statement for 2021-22 say?
The key points are-
- BB's monetary policy stance for FY22 is designed to continue the ongoing expansionary and accommodative mode supporting the disrupted economic recovery process while maintaining appropriate cautions for overall price and financial stability.
- Given the on-going devastating waves of Covid-19 pandemic, the basic challenges that BB may encounter in the coming months are the restoration of full normalcy in lives and livelihood, and extending required flow of fund to the intended production pursuits. Longer sustenance of the current coronavirus pandemic situation amid the continuation of global price hikes, and any unexpected crop loss in the coming seasons due to natural calamities s might create some undue commodity price pressure down the road.
- The presence of a huge amount of surplus liquidity in the economy attributed to the on-going expansionary fiscal and monetary stances may also contribute to form some price pressures in the days ahead.
- The public, and the private sector credit growth are projected to be annually grown by 32.6% and 14.8% respectively at the end of June 2022.
- A four-pronged approach will be taken to make maximum impact for the government's stimulus package. BB will consider to adopt all possible policy options for encouraging new entrepreneurs and for generating new employment opportunities which include: (1) continuation of the ongoing refinance policy with more focus on micro, small and labor intensive medium enterprises especially for the eradication of urban poor existed in the transportation, tourism, hospitality, healthcare and small businesses; (2) fully operationalize its credit guarantee scheme to expedite CMSMEs financing, particularly towards the light engineering, cluster and value chain, and women entrepreneurs' development; (3) permitting banks and financial institutions for opening technology driven sub-branch in the rural remote areas by engaging their own-recruited minimal workforce for creating quality jobs and enhancing financial inclusion alongside ensuring proper safety and security; and (4) bringing the education sector, perhaps the most affected sector due to COVID-19 pandemic, to the refinance scheme so that both the needy teachers and the students can get their minimum required amount of loans for purchasing necessary electronic equipment, smart devices.
- Given the economic adversities due to the Covid-19 pandemic, BB will continue its ongoing progrowth expansionary and accommodative monetary policy stance to support investment and employment-generating activities, and help create enabling conditions for the businesses to normalize production and supply chains