Author/Editor:

International Monetary Fund. Asia and Pacific Dept

Publication Date:

June 8, 2017

Electronic Access:

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Summary:

Steady monetary policy management and fiscal discipline have strengthened macroeconomic stability, allowing the economy to benefit from favorable external demand, high remittances, and low commodity prices. The result has been strong output growth, falling inflation, moderate public debt, and a rebuilding of external resilience. This solid macroeconomic performance is set to continue this year, with growth projected to remain close to current levels and inflation broadly in line with Bangladesh Bank’s target. Downside risks to the near-term outlook include a resumption of political unrest, security concerns affecting confidence and investment, a protracted slowdown in key export markets, and weaker remittances. Excess liquidity in the banking sector poses a latent risk to macroeconomic stability. Looking ahead, maintaining the economy’s past growth performance will become increasingly challenging and require upgrading the macroeconomic policy-making practices and institutions to support the country’s ambition to reach middle-income status.