Country Forecast Bangladesh April 2018 Updater

Country Forecast Bangladesh April 2018 Updater

  • April 2018 •
  • Report ID: 486658 •
  • Format: PDF


  • The Economist Intelligence Unit expects the Awami League to win a majority in the legislative election scheduled for late 2018. Despite the imprisonment of the leader of the Bangladesh Nationalist Party, Khaleda Zia, for graft, we expect the party to participate in the poll (it boycotted the 2014 election) in order to prevent its further marginalisation from Bangladeshi politics.
  • The threat of terrorist attacks remains high. Political stability will also be marred by opposition-backed protests against Mrs Zia's corruption conviction. The appeal of Bangladesh to foreign investors will remain vulnerable to such episodes and related bouts of social and political unrest. However, the security forces will be able to prevent any marked deterioration in law and order.
  • Foreign policy will focus on ties with key regional players. Political and economic ties with India and, to a lesser extent, Japan will continue to deepen over the forecast period. Relations with China will also be strong, with a particular focus on economic, investment and trade ties.
  • Policymakers will accord a high priority to improving electricity supplies but will continue to face challenges in meeting demand. Private electricity producers will achieve some success in this area, but power rationing will continue in 2018-22 as rising industrial and consumer demand outstrips increasing capacity.
  • The government will continue to run budget deficits throughout the forecast period. We expect a tightening monetary policy stance in 2018-19 in tandem with further interest-rate increases in the US. Thereafter, as depreciatory pressures on the taka ebb, monetary policy will be more accommodative.
  • Real GDP growth will average 6.8% a year in fiscal years 2017/18-2021/22 (July-June), bolstered by sustained gains in private consumption and investment. Private consumption will be supported by rising personal incomes (from a still-low base). Government spending will also increase ahead of the 2018 elections.
  • We forecast that the trade deficit will narrow to US$10bn in 2022, from an estimated US$12.3bn in 2017, owing to an improvement in readymade garment exports. This will be driven by an ongoing shift in low-cost manufacturing away from China, and continued demand from major markets (the US and the EU).
  • Remittance growth will be modest over the forecast period, as fiscal consolidation and immigration-curbing policies in Gulf countries exert a drag on remittance inflows. This, coupled with a wide trade deficit, will result in a current-account deficit equivalent to 1.4% of GDP on average in 2018-22.


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