Bangladesh s real GDP growth will likely remain stable at -.- in FY----/-- (July-June) before picking up slightly to -.- in FY----/--, aided by an accommodative monetary policy, an ex- pansionary fiscal policy and the return of a stable political climate. In particular, the government s ongoing focus on public investment into supporting infrastructures should help to attract more investment and boost productivity in the manufacturing sector, thus allowing Bangladesh to retain its dominant position in the global garment industry. ...As such, we forecast the Bangladeshi taka to weaken slightly against the US dollar in ----, taking the end-year exchange rate to BDT--.--/USD. The number of domestic terror attacks in Bangladesh could increase over the coming months, posing further downside risk to political and social stability as the Awami League government continues to dismiss the presence of the Islamic State in the country and downplay the scale of the threat. Accordingly, we have downgraded Bangladesh s Short-Term Political Risk score to --.-, from --.- previously. ...Bangladesh Bank will likely hold off further interest rate cuts over the remainder of ---- as volatile food inflation and rising core inflation will constrain the monetary authority s policy options. However, the central bank could adopt more selective easing measures over the coming months if stimulus effects fall short of its expectations.
...----e ----e ----f ----f ----f ----f ----f ----f ----f ----f ----f ----f Private final con- sumption, BDTbn -,---.- --,---.- ...Source: BMI, Bangladesh Bureau of Statistics its revenue base. Meanwhile the government s move to issue sav- ing certificates (which serve as a form of welfare instrument and typically provide higher returns) to finance its expenditure shortfall will likely keep interest cost elevated, which will in turn limit government consumption. Fixed Investment: Gross capital formation constitutes around -- of nominal GDP, and we expect this percentage to increase gradually to about -- over our forecast period of ---------. ...Net Exports: Bangladesh s net export deficit accounts for around - of nominal GDP at present, as large remittances inflows al- low the country to sustain its trade imbalance. Over the coming decade, we expect this trade deficit to gradually fall below - of GDP as the country s total factor productivity improves, and the manufacturing export sector (particularly garment) grows in importance.
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