The review highlights how Bangladesh balances robust growth prospects against very low per capita income and economic competitiveness
Moody's Investors Service has just completed its periodic review of a group of issuers – including Bangladesh.
Bangladesh's credit profile reflects the country's economic strength – which balances robust growth prospects against very low per capita income and economic competitiveness. It also shows the country's vulnerability to climate change risks – given its low-lying nature with large coastal areas prone to flooding and the influence of seasonal monsoon rains on rural incomes and consumption.
The review of the strength of institutions and governance takes into account weaknesses in the government's effectiveness, corruption control and low credibility in its legal structures – although macroeconomic policies are effective and conducive to macroeconomic stability.
It assessed the fiscal strength of Bangladesh's government – which balances the government's low debt burden against weak debt affordability because of its narrow revenue base.
The review also covers susceptibility to domestic political risk – incorporating a high-probability, low-impact scenario involving protests motivated by issues ranging from wages to road safety – that threatens to slow economic activity and raise perceptions of risks in the country. Meanwhile, banking sector risk remains elevated given the persistent weakness of state-owned banks.