World bank lowers Bangladesh’s economic growth projection for fy24
The World Bank on Tuesday said Bangladesh’s economy may grow at a slower pace in the current FY24 than it did in the previous fiscal year as it faced economic headwinds such as high inflation, external payment pressure, financial sector vulnerabilities and uncertainty.
In their latest report, “Bangladesh Development Update- New Frontiers in Poverty Reduction”, it also stated that Bangladesh has had a good recovery record, especially post-Covid-19 pandemic period.
To bring that space again and to overcome these challenges, Bangladesh should not delay in reforming its financial sector, and must adjust monitoring of its fiscal policies amid the uncertainty surrounding the upcoming general election.
However, the report also forecast that if Bangladesh delayed in making reforms, Bangladesh’s economy would grow at a slower pace in FY24.
Due to persistent inflationary pressures and external sector challenges, the global lender projected a 5.6 percent economic growth in Bangladesh for the current fiscal, in its update, which it publishes twice a year.
China’s economy is stabilising
Service consumption remains the pillar of China’s consumer recovery. August was the first month for which the NBS released data on retail sales of services (which expanded by 19.4 percent year on year); this new indicator encapsulates consumer spending in sectors such as education and tourism. The strength of these dynamics was also reflected in price indices tied to the service industry, which helped to stabilise (still-sedate) headline consumer price inflation readings at 0.1 percent, in August. Another month-on-month increase in consumer prices—at 0.3 percent, accelerating marginally from 0.2 percent in July—underpins our belief that consumer confidence is recovering, to the benefit of consumer-facing industries. We expect this underlying strength to persist through the remainder of 2023.
Sales of discretionary goods achieved strong improvement in August. Year-on-year growth was stable in categories such as cosmetics (9.7 percent), communication devices (8.5 percent) and gold and jewellery (7.2 percent), suggesting a return of some expenditure towards durable goods and away from services (which, thus far, have dominated the consumer rebound narrative). As the summer holidays end and (domestic) tourism demand fades, we expect this “redirection” of spending to pick up pace.
India’s growth to remain resilient
India continues to show resilience against the backdrop of a challenging global environment, according to World Bank’s latest India Development Update (IDU).
The IDU, the Bank’s flagship half yearly report on the Indian economy, observes that despite significant global challenges, India was one of the fastest-growing major economies in FY22/23 at 7.2 percent. India’s growth rate was the second highest among G20 countries and almost twice the average for emerging market economies. This resilience was underpinned by robust domestic demand, strong public infrastructure investment and a strengthening financial sector. Bank credit growth increased to 15.8 percent in the first quarter of FY23/24 compared with 13.3 percent in the first quarter of FY22/23.
The IDU expects that global headwinds will continue to persist and intensify due to high global interest rates, geopolitical tensions, and sluggish global demand. As a result, global economic growth is also set to slow down over the medium term against a background of these combined factors.
Bank Indonesia official signals steady rates
Bank Indonesia could maintain price stability with past rate hikes, a deputy governor said on Wednesday, signalling policy rates will be held steady again later this month as authorities try to shore up confidence in currency and bond markets.
The Comments by Bank Indonesia (BI)’s Destry Damayanti, the second most senior official at the central bank and a member of its rate-setting board, came as the bank bought government bonds in an effort to stem a selloff in the debt market and rupiah currency.
It was the first bond-buying operation by the BI since 2022, underscoring anxiety in official circles about the shakeout in markets, with the rupiah extending its fall on Wednesday to as low as 15,640 a dollar, its weakest since Dec. 30.
The Benchmark 10-year bond yield also hit 7.067 percent, the highest since November, before falling slightly.
Japan’s Prime Minister says: ‘reassess our economy’
Throughout September, in Tokyo, New York, Hong Kong and London, the world’s biggest investment banks hosted a series of conferences for the world’s biggest investors, all gravitating around the same theme: is Japan really back?
And, according to both the attendees and hosts of those events — which were run by JPMorgan, Goldman Sachs, Bank of America, Mizuho, BNP Paribas, and Jefferies — the answer is now clearer than it has been in a very long time. Japan is back, but global investors may take a little more persuasion that it is truly back for the duration.
So, this week, prime minister Fumio Kishida will make his strongest ever push for a bet on Asia’s biggest advanced economy — as BlackRock founder Larry Fink, and other heads of global funds, gather in Tokyo for a series of events to attract investment.
“I would urge you to evaluate what we are doing in my country, look at the underlying strength of our economy and our plans for the future and then invest in Japan,” Kishida said in a recent speech at the Economic Club of New York.
Malaysia and Thailand GDP outlooks cut: JCER
Economists have downgraded this year’s growth forecast for Malaysia, the Philippines, Singapore and Thailand due to declining China-bound exports and other factors, according to a quarterly survey compiled by the Japan Center for Economic Research and Nikkei.
The JCER and Nikkei, which conducted the latest economic outlook survey for Asian economies from Sept. 1 to Sept. 21, received 37 responses from economists and analysts in the five major members of the Association of Southeast Asian Nations — Indonesia, Malaysia, the Philippines, Singapore and Thailand — as well as from India.
The Forecast for this year’s economic growth rate for the five ASEAN nations was revised down to 3.9 percent from 4.2 percent in the previous survey, in June, marking a second consecutive downward revision.
Malaysia’s expected GDP growth for this year was downwardly revised to 4 percent, a 0.4-point decline from the previous survey, as the nation’s exports continue to decline. Part of the decline is due to weakened semiconductor exports.
China’s economy has been lackluster since the country’s rulers lifted their zero-COVID policy. The troubled property sector has been a particularly strong drag on the economy.
Maldives economy to grow by 6.5pc in 2023
Real GDP is expected to grow by 6.5 percent in 2023, with an average growth of 5.4 percent from 2024 to 2025, but challenges lie ahead, with growing external and fiscal vulnerabilities posing risks to the economy, particularly if Maldives continues to borrow at high costs during a global economic slowdown, says the World Bank in its twice-a-year update.
Released as a companion piece to the latest South Asia Development Update, the Maldives Development Update titled Batten Down the Hatches presents a positive outlook for the country’s medium-term growth, primarily driven by a thriving tourism sector. But the country is grappling with pressing fiscal challenges due to inflationary pressures linked to rising global commodity prices, increased capital spending and subsidies, and ongoing central bank financing of the budget deficit. These challenges require an urgent and robust fiscal adjustment and responsible debt management to ensure fiscal sustainability.
World bank paints grim economic outlook for Nepal
Slow growth, stagnant wages, high inflation, inadequate investment, low private sector confidence, growing corruption and scandals, the exodus of youth to foreign countries and abrupt changes in policies.
These are the characteristics of the economy that Nepal is experiencing.
Nepal’s economy is caught in a cycle of high inflation and low growth, said Jagdish Chandra Pokhrel, a senior economist. “In the beginning, expectations were high but there is nothing on track.”
The Government targets a 6.0 percent economic growth this fiscal after suffering one of the lowest growth rates—at 1.9 percent—last fiscal year.
On September 20, the Asian Development Bank projected Nepal to grow by 4.3 percent in the current fiscal year ending mid-July 2024, down from the earlier forecast of 5 percent.
On Tuesday, the World Bank said Nepal’s economy will grow by 3.9 percent in the current fiscal year.
Philippine economic growth slows
The International Monetary Fund (IMF) has revised its growth forecast for the Philippine economy on Tuesday, projecting a slower expansion due to persistently high inflation. The IMF now expects the Philippines’ economic growth to be 5.3 percent for the current year, a decrease from its July estimate of 6.2 percent. This adjustment follows a second-quarter slowdown in growth and an anticipation of continued high inflation negatively impacting consumer demand.
The IMF also expects Philippine inflation to average close to 6 percent for the year, before easing to approximately 3.5 percent in 2024. This elevated inflation rate may necessitate a “higher-for-longer policy rate path,” according to the Fund’s statement on Tuesday. In other words, the central bank may need to maintain higher interest rates for an extended period until inflation falls within the target range.
The Central bank has held interest rates steady at its two most recent meetings, but it has not ruled out further rate hikes as a measure to bring inflation back within its target range of 2 percent to 4 percent for the year. Inflation had accelerated in August to 5.3 percent.
World bank boosts Sri Lanka economic forecasts
The World Bank revised up its forecasts for Sri Lanka’s economy on Tuesday, noting the crisis-hit nation had made strides in reducing inflation and had benefited from tourism revenue as well as an appreciation in its currency.
The Bank now expects the economy to expand 1.7 percent in 2024, up from an earlier forecast of 1 percent. It also said the economy is likely to shrink 3.8 percent this year, less than its earlier prediction of a 4.2 percent contraction.
In the last six months, Sri Lanka has seen runaway inflation drop to 1.3 percent in September, its currency appreciate by about 12 percent and foreign exchange reserves improve. It has also benefited from an increase in remittances.
But the World Bank also noted Sri Lanka’s outlook was still clouded by significant uncertainty and there were downside risks.
“Growth prospects will depend on progress with debt restructuring as well as continued implementation of growth enhancing structural reforms,” Richard Walker, a World Bank senior economist told a media briefing.
“We see further monetary loosening and potential exchange rate pressures, which could counter this downward inflationary trend,” he added.
Sri Lanka struck an agreement for a $2.9 billion bailout package from the International Monetary Fund in March but a potential shortfall in government revenue has meant that a second tranche of funds from the package may be delayed.
In contrast to the World Bank, Sri Lanka’s central bank has predicted a milder 2 percent contraction this year and growth of 3.3 percent in 2024. The economy shrunk 7.8 percent in 2022.