Bangladesh’s economy will see a 4.4% growth this fiscal year and will take two more years to see a turnaround from the damage caused by the Covid-19 pandemic, the International Monetary Fund (IMF) says in its World Economic Outlook 2020 released on Tuesday .

The forecast came on the heels of the World Bank’s projection last week that Bangladesh would achieve a 1.6% growth in gross domestic product (GDP) in the current fiscal year.

In September, the Asian Development Bank (ADB) predicted that the country would register a 6.8% GDP growth, while the official estimate remains 8.2%.

In its latest outlook up to 2025, the global lender forecasts that Bangladesh’s GDP growth will reach close to 8% again by 2022 before slowing down to 7.3% in the next three years.

The country’s GDP reached an all-time high of 8.15% in the fiscal 2018-19, which was brought down to 5.24% by the pandemic in the last fiscal year ending in June.

The IMF, however, put the last fiscal GDP growth at 3.79%.

The global lender predicts that inflation will remain below 6% despite higher economic growth expected in coming fiscal years.

The investment-GDP ratio will go up gradually – to 27.28% this fiscal year and 30.96% in FY22.

The IMF also projects a decline in current account deficit, which will fall to 2.75% of GDP this fiscal year and further fall to 1.5% or less in the next fiscal year.

In the outlook, global growth is projected to be negative 4.4% this year and will rebound to 5.2% in 2021 as the world economy will see a “long, uneven and uncertain ascent”.

“We continue to project a deep recession in 2020. This is the worst crisis since the Great Depression, and it will take significant innovation on the policy front, at both the national and international levels to recover from this calamity,” IMF Chief Economist Gita Gopinath wrote in IMFBlog on Tuesday about the latest outlook.

Although the crisis is still far from over, she says the global economy is coming back from the “depths of collapse” on the back of eased lockdowns and unprecedented policy support by central banks and governments around the world.

When contacted, Dr Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said the Covid-affected economy still remains in uncertainty. There is no clear indication of an increase in investments. Besides, how much export earnings will increase is also uncertain.

On the other hand, after losing jobs, many people’s income has dropped, which naturally will have a negative impact on demand, he added.

“So, we can say economic growth will witness a downtrend. But the extent of fall depends on different models. The World Bank follows a model and the IMF another while the ADB has a different type. That is why we see differences in GDP forecasts,” Mustafizur added.

He said since people’s income has decreased. Therefore, the possibility of inflation with respect to demand will not be that much. That is why the overall inflation is more likely to be on a downtrend in the coming days.

Dr Ahsan H Mansur, former IMF senior official and executive director of Policy Research Institute, thinks there is less possibility of Bangladesh’s GDP to see positive growth in the first half of the current fiscal year. The extent of the economic turnaround in the second half will depend on how much the second wave of Covid-19 affects worldwide.

“If the impact is greater, I do not think the growth that the IMF has projected for the current fiscal year will be the same,” he added.

However, if the coronavirus situation improves in the next fiscal year, the economic growth is likely to see an uptrend. But it still hinges on how much the government can reform. There has been no reform yet in administration, and revenue and health sectors, Dr Ahsan H Mansur pointed out.

The government will face a big financial crisis in the future for not reforming the revenue sector. It will have to depend on loans for the budget implementation, he added.

Work on special economic zones to bring in foreign direct investment is going on, but at a slow pace. The bottom line is that the economy needs to go through a massive reform for improving its health, and growth will increase only if it is properly reformed, he also said.