<div style="text-align: justify; "><span style="font-size: 1rem;"><b>Bangladesh's economy made a strong turnaround from the COVID-19 pandemic, but the post-pandemic recovery continues to be disrupted by high inflation, a persistent balance of payments deficit, financial sector vulnerabilities, and global economic uncertainty, says the World Bank in its twice-yearly update.</b></span><br></div><div style="text-align: justify; "><br></div><div style="text-align: justify;">Released today, the latest Bangladesh Development Update says that urgent monetary reform and a single exchange rate regime will be critical to improve foreign exchange reserves and ease inflation. Greater exchange rate flexibility would help restore balance between demand and supply in the foreign exchange market.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">“Bangladesh’s strong macroeconomic fundamentals have helped the country overcome many past challenges,” said Abdoulaye Seck, World Bank Country Director for Bangladesh and Bhutan.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">“Faster and bolder fiscal, financial sector, and monetary reforms can help Bangladesh to maintain macroeconomic stability and reaccelerate growth,” he added.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Structural reforms will be key to diversify the economy and build resilience over the medium and long term, including measures to raise government revenues to support investments in infrastructure and human capital, said the global lending agency.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Persistent inflation eroded consumer purchasing power, while investment was dampened by tight liquidity conditions, rising interest rates, import restrictions, and increased input costs stemming from upward revisions in administered energy prices.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Private sector credit growth slowed further in FY24, reflecting a broader slowdown in investment.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The non-performing loan (NPL) ratio in the banking sector remains high and understates banking sector stress due to lax definitions and reporting standards, forbearance measures, and weak regulatory enforcement.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The balance of payments deficit moderated over the first half of FY24 driven by a surplus in the current account.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The report’s companion piece, the latest South Asia Development Update — Jobs for Resilience, also released today, says that South Asia is expected to remain the fastest-growing region in the world for the next two years, with growth projected to be 6.0% in 2024 and 6.1% in 2025.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Growth in South Asia is expected to be driven mainly by robust growth in India and Bangladesh, and recoveries in Pakistan and Sri Lanka.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">But this strong outlook is deceptive, says the report. For most countries, growth is still below pre-pandemic levels and is reliant on public spending.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Persistent structural challenges threaten to undermine sustained growth, hindering the region’s ability to create jobs and respond to climate shocks.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Private investment growth has slowed sharply in all South Asian countries and the region is not creating enough jobs to keep pace with its rapidly increasing working-age population.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">“South Asia’s growth prospects remain bright in the short run, but fragile fiscal positions and increasing climate shocks are dark clouds on the horizon,” said Martin Raiser, World Bank Vice President for South Asia.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">“To make growth more resilient, countries need to adopt policies to boost private investment and strengthen employment growth.”</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">South Asia’s working-age population growth has exceeded than that in other developing country regions.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The share of the employed working-age population has been declining since 2000 and is low.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">In 2023, the employment ratio for South Asia was 59%, compared to 70% in other emerging markets and developing economy regions.&nbsp;</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">It is the only region where the share of working-age men who are employed fell over the past two decades, and the region with the lowest share of working-age women who are employed, reports UNB</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">“South Asia is failing right now to fully capitalize on its demographic dividend. This is a missed opportunity,” said Franziska Ohnsorge, World Bank Chief Economist for South Asia.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">“If the region employed as large a share of the working-age population as other emerging markets and developing economies, its output could be 16% higher.”</div><div style="text-align: justify;"><br></div><div style="text-align: justify; ">bnbd24/fas</div>