The World Bank believes that there are four major challenges in Bangladesh's economy at the moment, including political uncertainty. These are high inflation, external sector pressures and financial sector weakness. Due to these reasons the growth will not increase much.

The gross domestic product (GDP) of Bangladesh may decrease by 4 percent in the fiscal year. But in 2025-26 financial year it may increase to 5.5 percent. Substantial uncertainty will result in moderate growth in agriculture due to weak growth in investment and industry and the recent floods. All these will have a negative impact on growth.

This information was revealed in the 'Bangladesh Development Update' report published in a press conference at the World Bank office in Agargaon, capital, on Tuesday (October 15).

World Bank Country Director Abdoulaye Sek spoke online from Washington at the news conference. World Bank Senior Economist Dhruv Sharma, Economist Nazmus Khan and World Bank Senior Communication Officer Mehreen A Mahbub were present on this occasion.

Abdoulaye Sek said, Bangladesh's growth in recent years has not contributed much to job creation. Yet every year a significant number of young people are entering the job market. One of the challenges is the rise of educated and urban unemployed in particular.

He also said that high inflation is one of the challenges for Bangladesh. It cannot be reduced even with various initiatives. Especially food inflation is very high. Which lowers the standard of living of common people. In addition, discrimination is also increasing in Bangladesh. It is increasing every year as Gini coefficient. Initiatives to reduce discrimination are needed in this regard. Inclusive growth and various reforms in the financial sector must be expedited.

According to the report, there are several challenges in the economy of Bangladesh at the moment. Among these are high inflation, external sector pressure, financial sector weakness and political uncertainty. Due to these reasons the growth will not increase much.

The agency said there are major challenges in creating employment in the institutional sector in Bangladesh. Because still 84.9 percent employment is in informal sector. This is a very high number. Between 2016 and 2022, employment in the manufacturing sector declined by 9.6 percent.

Talking about the financial sector, the report said, there are various types of crisis in the banking sector, especially the default loans are very high. Despite many efforts of the government, it cannot be controlled. Besides, Bangladesh Bank has increased the loan interest rate to reduce inflation. This has reduced borrowing in the private sector.

In the report, the World Bank says that Bangladesh's growth will slow down to between 3.2 percent and 5.2 percent. According to the World Bank, the intermediate point would be 4 percent. The World Bank in April had forecast growth of 5.7 percent for the current fiscal year 2024-25.

The recently collapsed Awami League government had set a target of 6.75 percent growth in the budget of the current fiscal year. Accordingly, the World Bank forecast will be 2.75 percent less than the government target. If the economic growth in Bangladesh falls as per the World Bank forecast, it will be the slowest growth since the Covid pandemic. In the fiscal year 2019-20, the country had a growth of 3.45 percent.

Besides reducing the forecast for the current fiscal year, the World Bank has also reduced the growth estimate for the last fiscal year 2023-24 to 5.2 percent. The government's provisional estimate for the last financial year was 5.82 percent.

Regarding employment, the news conference said that there is a gap between demand and supply in the labor market in Bangladesh. That's a big problem. In this regard, diversification of exports, increase in foreign investment and increase in quality of education should be done. Technical education in Bangladesh has a miss match with skills. Special importance should be given to these issues to increase employment in the institutional sector. The internal revenue collection situation is also noted to be poor.