It will take longer than previously expected for Bangladesh's economy to recover from the effects of the coronavirus pandemic as its spread did not slow down in the first half of the year, according to the IMF.
The International Monetary Fund (IMF) has projected a 5.7 percent GDP growth for the next fiscal year, which is significantly lower than the forecast of 9.5 percent for the next calendar year that the agency had made in April.
The IMF made the disclosure on Wednesday in a report prepared to approve $732 million in emergency support for Bangladesh.
In the report, the organisation also said the Bangladeshi economy would achieve a 3.8 percent growth in the 2019-20 fiscal year, which will end this month. But the IMF had initially projected only a 2 percent growth for this fiscal year.
Before the Covid-19 outbreak, however, Bangladesh was projected to achieve about 7.4 percent GDP growth in the current fiscal year.
According to the report, the possibility of growth has reduced by 4.5 percentage points compared to that of the previous year – the largest one-year decline the country has faced in the last three decades.
The report further said that the Bangladeshi economy may grow by 8 percent in the 2021-22 fiscal year.
Dr Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, told The Business Standard that the IMF had made the previous projections based on an assumption that the pandemic would not sustain after the first half of this year.
But as the coronavirus has kept spreading and the number of infections has been increasing, it will take a longer time to recover, he added.
He also said that since Covid-19 hit the economy in March, just before the last quarter of the current fiscal year, it is realistic for the country to meet about 4 percent GDP growth. But considering the calendar year, it may fall to 2 percent or below.
Bangladesh may face a wider deficit in its current account balance at 2.2 percent of GDP in the current fiscal year, and at 3.5 percent of GDP in the next fiscal year, the report projected.
Prior to the Covid-19 outbreak, the deficit was anticipated to be about 1 percent of GDP in the current fiscal year, and 1.5 percent in the next fiscal year.
Dr Zahid Hussain, former lead economist of the World Bank, said the IMF has projected a comparatively slower recovery than forecasts made in April.
"This is, to some extent, for the gap between the fiscal year and the calendar year, and to some extent for the availability of more data. It will require more time for the economy to recover than in the projections of the IMF," he said.