Trendspotting: June 2021

According to the recently announced 2021-22 budget, the economy is supposed to have grown by 6.1% in the 2020-21 financial year. In contrast, the Asian Development Bank is more bullish, with a growth forecast of 6.8%, while the World Bank is far gloomier, projecting only 3.6% growth for the year.

Our charts suggest that there are positive signs, but also grounds for caution.

The most significant positive changes in the last three months are:

—   imports growing by 11% in the year to March 2021;

—   tax revenue growing by nearly 7% in the year to April 2021;

—   remittances continue to grow; and

—   over 90,000 workers left for overseas in March-April.

However, the recovery is far from guaranteed, as:

—   electrical generation remains low;

—   there is very minimal growth in industrial production;

—   there is minimal growth in exports; and

—   credit to private sector is still slowing down.

Importantly, these indicators do not fully take into account the pandemic wave of April-May.

Overall assessment

Bangladesh economy, already slowing before the Covid-19 recession, is yet to show any sign of a durable growth. That said, there were flickers of recovery in some indicators. Production as well as household demand appeared to have bottomed out by March-April (that is, before the latest lockdowns). Labour income appeared to be recovering, and food prices were stabilising towards the end of 2020. Policies are supportive of growth. Stock market appears to be optimistic.

Trendspotting

Bangladesh’s economy, already slowing before the Covid-19 recession, is yet to show any sign of a durable recovery. Production measures appear to have bottomed out, but perhaps not quite so for household demand. While labour income is recovering, food prices spikes point to problems in the farm supply chain. Policies are supportive of growth. Stock market appears to be optimistic.