Dhaka: Bangladesh, the world’s second-largest apparel exporter, sees economic growth of at least 6% this year, a pace that could make it an outlier in a world set to contract.
Growth will slow to a range of 6%-7% in the year to June 30, Planning Minister Muhammad Abdul Mannan said in an interview on Thursday.
While that is lower than a previously targeted 8.2%, and down from 8.15% a year ago, it’s poised to be the fastest expansion globally — as many economies are staring at a recession amid the coronavirus pandemic.
It isn’t a reason for celebration though for a country known to rely heavily on global demand by virtue of it being the world’s clothing factory. The International Monetary Fund isn’t as bullish with its estimate, putting the nation’s gross domestic product growth at 3.8% for fiscal 2020.
“Growth is clearly way below, a lot below projection,” Minister Mannan said. “We have to reorganize our priorities. Health has become the new urgent subject, which requires much more investment than before.”
More than 80% of the country’s export earnings come from ready-made garment, and the industry is now facing a string of order cancellations.
European and U.S. buyers have canceled or suspended $3.2 billion of orders since March, according to the Bangladesh Garment Manufacturers and Exporters Association. A two-month-lockdown to fight the pandemic has hurt other industries as well.
“The coronavirus has affected us badly,” Mannan said, adding that it was necessary to allow resumption of activity. “This was a bitter pill.”
Bangladesh is scheduled to present its annual budget on June 11, and the spending plan is likely to focus on shoring up other sectors of the economy.
“Expenditure is going up in the next budget as we need more money for health and agriculture and roads and other important sectors,” Mannan said.-Bloomberg