Credit growth rises moderately.
Private sector credit growth went up moderately in February to keep up with the recovering trend of the economy, but bankers say the rising coronavirus infections and deepening uncertainty have dipped the growth in March. The year-on-year credit growth stood at 8.93 per cent in February, up from 8.32 per cent a month earlier, data from the central bank showed. The February’s growth is also the highest since October last year.
Businesses commenced to expand their enterprises heavily last month riding on the slower coronavirus infection, but the momentum has faced a roadblock this month when the deadly flu started spreading in a consistent manner, said managing directors of three banks.
Industry insider said that the loan disbursement has declined to a large extent this month as credit appetite has nosedived due to the upward trend of the infection. They added that Funds disbursed by banks have already seen a slower trend in March than in February. Businesses moved to import capital machinery and industrial raw materials last month. a good number of letters of credit (LCs) to import commodity products were earlier opened to fulfil Ramadan demand, putting a positive impact on private sector credit growth. The outstanding loans in the private sector stood at Tk 11,53,511 crore as of February in contrast to Tk 11,40,023 crore the previous month.
WB now doubles GDP growth forecast.
The World Bank has more than doubled its gross domestic product (GDP) growth prediction for Bangladesh for the current fiscal year as the economy shows signs of recovery. The Washington-based lender expects the economy to grow 3.6 per cent in the FY2020-21, up from a projection of 1.6 per cent made in the Global Economic Prospects Update in January. “The economy is expected to recover gradually, with real GDP growth projected at 3.6 per cent in FY21,” the WB said in a document. The new prediction was made in a paper of the Bangladesh Third Programmatic Jobs Development Policy Credit.
The new GDP growth prediction is still far lower than the government’s estimate of 7.4 per cent for the current fiscal year. In January, the lender said in Bangladesh growth was estimated to have decelerated to 2 per cent in the last fiscal year. It is now projecting a growth of 2.4 per cent for FY20, according to the document, which was prepared in February. The government’s provisional estimate showed the GDP had grown by 5.24 per cent in the last fiscal year.
While downside risks are significant, Bangladesh has a record of sustained macroeconomic stability over the past three decades through various global crises, internal political instability and natural calamities, providing additional assurance of its capacity to handle the emerging macroeconomic risks in the near and medium-term, the WB said. “Bangladesh’s low debt to GDP ratio provides a significant buffer, and despite the increase in spending to deal with the pandemic, the country continues to be at low risk of debt distress.