The central bank of Bangladesh. Photo: BBN
Dhaka, Bangladesh (BBN) - The central bank of Bangladesh expects higher growth in near term despite three risks in the economy.
“Looking ahead, supported by both domestic and external demand, output growth is expected to be strong,” the central bank said in its latest Bangladesh Bank Quarterly (BBQ) for October-December 2017.
It also said headline inflation may moderate in the last quarter of the current fiscal year (FY) 2017-18 from favorable agricultural production.
“Strong credit growth, wider current account deficits, and inflationary risks, however, warrant continued prudent management of macro-financial stability,” the Bangladesh Bank (BB) noted.
Looking ahead, in 2018, oil prices are expected to remain elevated as global economic activities are likely to be strong, according to the BBQ.
On the domestic front, higher food inflation increases the risk of second- round effects on non-food inflation and may raise inflation expectations, although favorable agriculture production will likely moderate the risks of any second-round effects.
Besides, inflationary risks are higher from an upturn in private credit growth and exchange rate pass-through effects of global prices on local prices, although moderate growth of broad money will likely ensure that monetary factors do not complicate inflationary risks, the central bank explained.
The central bank also said the growth momentum in economic activities remained robust in the second quarters (Q2) of FY18, aided by strong private sector credit growth and export, a surge in remittance inflows, and higher import demand for investment.
“On the supply side, the buoyancy was led by the industry sector, while the service sector seemed to have maintained its recent trend path in the absence of any major weather-related and political shocks,” it noted.
The country’s agriculture sector regained its momentum as it recovered from the flood-related shocks and helped moderate food price increases.
BBN/SSR/AD