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Slowdown in remittance to weigh on BD, Sri Lanka: WB

Published : Sunday, 14 January, 2018 at 12:00 AM Count : 39
Business Correspondent

Bangladesh is likely to achieve the highest growth-6.7 per cent among South Asian countries in 2018, with the lowest growth of 3.4 percent in Afghanistan, 5.1 per cent in Sri lanka and 5.5 per cent in Pakistan, according to the World Bank report published recently.
But recent adverse weather conditions in some countries and a protracted slowdown in remittance inflows would weigh on domestic consumption in Bangladesh and Sri Lanka, the multi-donor agency said in its outlook.
Growth in the region is expected to pick up to 6.9 percent in 2018, and stabilize around 7.2 percent over the medium term, but remain slightly below June projections due to the weaker-than-expected recovery in domestic demand, the World Bank said in its report title Global Economic Prospects-2018.
"The region's growth prospects appear robust, with household consumption expected to remain strong, exports expected to recover, and investment projected to revive with the support of policy reforms and infrastructure improvements", the World Bank said.
But recent adverse weather conditions have reduced agricultural output in some cases which continue to pose risks to regional growth. Recently, remittance inflows have been subdued due to fiscal consolidation and growth slowdowns in the Middle East, which constitutes roughly half of remittances to South Asia.
Bangladesh will grow at an average of 6.7 percent a year over FY2018-2020, benefiting from strong domestic demand and strengthening exports. Low interest rates and improved infrastructure are expected to lift investment, the World Bank forecasts in its outlook over South Asian region.
Remittances are expected to rebound as the growth firms in Gulf Cooperation Council (GCC) countries and support private consumption, the World Bank report said.
Growth in India is expected to remain stable at an average 5.9 percent a year over the medium term. In Pakistan, growth is forecast to  pick  up  to  5.5  percent  in  FY2017/18, and reach at an average 5.9 percent a year over the medium  term  on  the  back  of  continued  robust domestic  consumption,  rising  investment,  and  a recovery  in  exports, it said.
In Sri Lanka, the world Bank sees growth will be average  5.1 percent  a  year  over  2018-2020,  mainly  reflecting strong   private   consumption   and   investment growth.   Exports   will   be   supported   by   the reinstatement   of   the   Generalised   Scheme   of Preferences (GSP+) with the European Union.  
Bhutan's GDP is expected to expand 6.7 percent in FY2017/18 and reach an average 7.6 percent a year toward 2020, supported by hydropower-related construction and policies supporting the private sector. In Nepal, growth is expected to settle at 4.5 percent a year, on average, in the medium term as post-earthquake reconstruction winds down.
Growth in Afghanistan is forecast at 3.4 percent in 2018 to and average around 3.1 percent a year over the medium term, assuming no further deterioration in the security situation.
But the World Bank sees the main risks to the outlook are domestic, including fiscal slippages in Bangladesh, Maldives and Pakistan, setbacks to reforms to resolve corporate and financial sector balance sheet deterioration in Bangladesh and India and disruptions due to natural disasters, and persistent security challenges weakening domestic demand in Afghanistan.
As an external risk, an abrupt tightening of global financing conditions or a sudden rise in financial market volatility could set back the South Asian growth. On the other hand, stronger-than-expected global growth could benefit the more open economies in the region in the near term, the report observes.  
Increasing contingent liabilities related to infrastructure projects in Pakistan, debt write -offs for farmers in India, and slippages relating to upcoming elections and weak tax revenues in Bangladesh, Nepal, Pakistan could derail fiscal consolidation efforts.

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