This report highlights recent economicupdates in Bangladesh as of April 2015. Economic growth inBangladesh was gaining momentum in the first half of FY15.Capacity utilization improved and investments were showingsome signs of recovery. This growth was also job-friendly.The 12-monthly-moving average inflation decelerated from 7.6percent in February 2014 to 6.8 percent in February 2015.The resilience of the Bangladesh economy continues to betested by faltering political stability, weak globalmarkets, and structural constraints. These are inhibitingthe economy s income growth as well as progress on sharedprosperity. Despite the emergence of a $1.3 billion deficitin the current account in the first seven months of FY15,the surplus in the overall balance of payments has beensustained, leading to continued accumulation of officialforeign exchange reserves to prevent nominal exchange rateappreciation. Reserves are at a comfortable level at over 6months of imports of goods and services. Fiscal policy hasremained consistent with macroeconomic stability. Taxrevenue growth has been weaker than targeted whileexpenditure have also been short due as usual to animplementation shortfall. The projected recovery in globalgrowth, particularly in the United States and the Euro Zone,and continued softness in international commodity prices,bode well for Bangladesh. The country will need to restorepolitical stability and implement faster structural reformsto capitalize on these opportunities. The potential GDPgrowth rate is on a declining path due to declining laborforce growth and stagnant productivity growth, as well asthe rate of capital accumulation. Raising the low FemaleLabor Force Participation (FLFP) rate offers on opportunityto boost the economy s potential growth rate. Movingforward, the biggest challenge remains ensuring durablepolitical stability. This is a precondition for accelerated,inclusive, and sustainable growth.
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