Half a million Bangladesh citizens would slip into the category of ‘extremely poor’ in FY 2022-23 and 2023-2024 as their purchasing power was almost wiped out on account of inflation that is expected to touch 9.6 per cent, trounced by weak consumption.

“Weak private consumption growth and high inflation have halted poverty reduction. Higher food prices particularly impacted poor households, which allocate over half of their budget towards food expenditures,” said the World Bank’s poverty macro update for the country.

The World Bank defines those as ‘extremely poor’ who earn $2.15 a day or less.

In more bad news for the dispossessed in Bangladesh, another 8.4 lakh are expected to join the category of ‘moderately poor’, their purchasing power parity (PPP) pegged at $3.65 a day.

The updates were released as part of the South Asia Development Update on Tuesday, and it pointed to a slight increase in ‘moderate poverty’ too, up from 29.3 percent to 29.4 percent at the end of FY24.

Another negative trend for Bangladesh that the report cited was forex rationing which would hamper private investment. High inflation will weigh down heavily on consumption, the report mentioned.

PPP is a measure of the relative value of national currencies against the dollar by calculating the price of a fixed basket of goods and services. “Downside risks to the growth outlook have increased, with a weak global outlook. The pace of monetary and exchange rate reforms may be insufficient, depleting FX reserves. Tighter liquidity could exacerbate banking vulnerabilities,” the report further said.

The World Bank also reiterated that the economy went on a downward slide in FY 2023 owing to burgeoning inflation and widening of the Balance of Payment (BoP) owing to fiscal deficit.

The global lender said the estimated real GDP growth for Bangladesh slowed in the first half of FY24 as private consumption and investment stalled.

“On the supply side, industrial growth moderated as energy shortages and import restrictions offset steady external demand for RMG. The services sector slowed as domestic purchasing power declined, while agricultural growth remained modest.” “This has impacted labour income, especially for vulnerable populations working in services and agriculture.”

Rising food costs and power prices have kept inflation high.

Source: Firstpost

BDST: 1315 HRS, APR 04, 2024
MN/SMS