The World Bank has projected drastically low economic growth for Bangladesh, 1.6%, in FY2020-21, assuming that the initial rollout of Covid-19 vaccines will become widespread during the year.
However, Bangladesh government, in December last year, aimed at achieving the expected 7.4% economic growth in the current fiscal year.
The World Bank, in the latest report, also said development is expected to have decelerated to 2.0% in FY2019/20 in Bangladesh, but Bangladesh government announced of achieving 5.24% growth in that fiscal year, which was highest in South Asia and third globally.
The bank, in its Global Economic Prospects for January 2021, also expected that Bangladesh's economy will grow by 3.4% in next fiscal year. Bangladesh government, in its 8th 5-year plan, has targeted to achieve 7.70% growth in the fiscal year.
A rebound is likely to be muted, unless policymakers act decisively to tame the pandemic and introduce investment-enhancing reforms, the World Bank says in the report.
In the prospect report, the bank also mentioned that severe production losses have been caused by the Covid-19 pandemic and have led to a sharp increase in South Asian poverty and unemployment.
In 2020, production in the area fell by an estimated 6.7%, reflecting the effects of the pandemic and national lockdowns, especially in Bangladesh and India. As initial strict lockdowns were relaxed, activity rebounded in the second half of last year, led by industrial production.
The recovery is likely to be especially modest for economies that depend on external sources of growth, such as manufacturing exports (Bangladesh) and tourism (Bhutan, Maldives, Nepal, Sri Lanka).
In a report on Tuesday, World Bank said, the global economy is expected to expand 4% in 2021 after shrinking 4.3% in 2020. Although it has warned that rising Covid-19 infections and delays in vaccine distribution could limit the recovery to just 1.6% this year.
The World Bank's semi-annual forecast showed the collapse in activity due to the coronavirus pandemic was slightly less severe than previously forecast, but the recovery was also more subdued and still subject to considerable downside risk.