Private sector credit growth in Bangladesh surged 11.07% in January compared to the corresponding period last year, the highest in 29 months as a supercharged demand pushed up both import and export, shaking off the Covid funk.
Despite the growth touching the January milestone after maintaining an uptrend for seven months in a row, bankers are doubtful about maintaining the consistency in upcoming months as Russia-Ukraine war clouds the global recovery outlook.
In January this year, private sector credit growth stood at around Tk12.66 lakh crore – still 3.73% short of the central bank's 14.8% target – that was at Tk11.40 lakh crore in January last year, showed the Bangladesh Bank data.
The private sector loan growth had been facing sluggishness right after the coronavirus arrived on the shores of the country in March 2020 as demand plunged. Prior to January's 11.07%, the growth was 11.32% in July 2019.
Officials concerned said spiralled import, mainly capital machinery, propelled the loan growth in January.
According to the latest import data of the central bank, Bangladeshi entrepreneurs imported goods worth Tk4,212 crore in the first half of 2021-22 fiscal year, which was around 54% more than the July-December period of 2020-21 FY.
"There is no doubt that our economy registered a tremendous virus recovery, but I think this year will be very challenging for us," Selim RF Hussain, chairman of the Association of Bankers, Bangladesh (ABB), told The Business Standard.
Referring to Russia's military invasion on Ukraine, he feared the country's economy might face adverse effects four-six months later. Besides, he noted spiking commodity prices as a major concern.
"Though Bangladesh is small, we now live in a global village and the risks of spill-over effects squarely fall on all of us," added the ABB chairman.
However, Ahsan H Mansur, executive director of the Policy Research Institute (PRI), termed the record credit growth "very optimistic" for the economy to begin a brand-new calendar year.
"The loan growth could rise as high as 20% this year, sending the economy to run in full swing," he optimistically forecasted.
Private sector loan growth was 8.46% in January 2021, which was 8.51% in February and 8.79% in March last year.
With Covid rampaging the health sector and the country's economy, the growth hit the bottom 7.55% in May last year. Then it started to tick up gradually as the virus situation improved.