FY25 Bangladesh growth to fall to 5.7%: Mastercard Economic Institute

The central bank's policy rate is projected to be 9 per cent in FY25, which starts from July 1.

Persistently elevated inflation is weighing on consumer purchasing power and higher US interest rates for a longer period could add to external sector vulnerabilities, David Mann, chief economist for Asia Pacific and Middle East Africa at Mastercard institute told a Dhaka roundtable.

Bangladesh consumers have doubled their share of spending on essentials compared to pre-pandemic levels, driven by the rising prices of basic items at the cost of discretionary expenses, the institute said.

Mann said the possibility of the United States cutting its policy rate multiple times this year will be beneficial for Bangladesh.

While remittance income in Bangladesh has increased in recent months, import expenditures are also on the rise, he was cited as saying by domestic media reports.

Mastercard channels 20 per cent of Bangladesh's total remittance, according to Syed Mohammad Kamal, Bangladesh country manager of Mastercard.

The introduction of a crawling peg exchange rate regime in May and a better alignment between official and unofficial exchange rates are driving remittances up, he noted.

Fibre2Fashion News Desk (DS)