Bangladesh has maintained its robustgrowth performance. Exports and remittances have beenbuoyant. Agriculture had bumper harvests. Overall inflationhas slowed as decelerating food inflation offset a pickup innon-food inflation. Monetary expansion has been short oftarget as private sector credit growth slowed and theBangladesh Bank siphoned off banking liquidity by sellingdollars to defend the taka. Vulnerabilities in the bankingsystem and capital market persisted. Higher export and lowerimport growth reduced the current account deficit, but adecline in the financial account surplus diluted the impactof the current account deficit decline on the overallbalance of payments deficit. The budget deficit increased inFY18 but remained below the 5 percent of GDP target. Lowrevenue collection continues to be a major challenge aspolicy and administrative reforms have stalled and, in someinstances, reversed. Key structural reform challenges are tomitigate the financial sector vulnerabilities, strengthenrevenue mobilization, manage public investments better, meetthe infrastructure gap, enhance human capital and streamlinebusiness regulation. Addressing these reform challenges willbe critical for reinforcing future productivity growth. Thisreport provides an assessment of the state of the Bangladesheconomy, outlook, risks, and the key reform challenges theeconomy is currently facing. The coverage includesdevelopments in the real sector focusing on growth and itscomponents; inflation; monetary and financial sectordevelopments; external sector developments focusing on thebalance of payments, foreign exchange reserves and theexchange rate; and fiscal developments focusing on revenuemobilization, public expenditures, and deficit financing.The special focus in this update is on regulatorypredictability based on an analysis of firm level survey data.
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