The growth will be driven by several factors including public investment, business climate reforms, remittance and export growth
The World Bank has projected a 7.2 percent growth rate for Bangladesh in the fiscal year 2019-20.
In its Bangladesh Development Update report, the World Bank said the Gross Domestic Product (GDP) growth will be driven by several factors, including public investment, business climate reforms, remittance and export growth.
The development agency published the report Thursday at its country office in Dhaka.
The report forecasts that the implementation of public investment in infrastructure mega projects will likely continue. Private investment will be supported by business climate reforms and the operationalisation of new special economic zones.
In addition, domestic consumption will be supported by growing remittances, and exports are expected to continue growing as production shifts out of China, said the report.
The report warned about an uncertain global outlook and domestic risks in the financial sectors, highlighting that the exchange rate appreciation is also a challenge for Bangladesh trade competitiveness.
"Our inflation rate is higher than the countries to whom we trade. If our currency remains stable against US dollars and dollar's gains against the other country's currency, then taka also appreciates against other countries' currencies. This leads to a decrease in our price competitiveness," said World Bank advisor Jahid Hossain.
"If this continues, we will lose our market to our competitors, including India, Vietnam and Pakistan," he added.
The World Bank suggested expediting reforms in the financial sectors, including revenue mobilisation and the ease of doing business.
Due to the high credit concentration and non-performing loan, the banking sector still remains in a vulnerable situation, said the report.
The report also recommended closing the infrastructure gap and implementing the annual development plan timely.
The World Bank also said inflation is likely to rise moderately with increased natural gas prices, possible crop production losses due to the recent flood and the growing output gap.
The Bangladesh government targets 8.2 percent GDP growth for the current fiscal year.
Responding to a question on the gap between forecast of the government and that of the World Bank, the agency's Country Director for Bangladesh Mercy Tembon said, "I want to acknowledge that Bangladesh has done well. Number is not very important. The main factors are its quality and sustainability."
To sustain the growth and take it to the next level, the World Bank suggested focusing on human capital.
"To achieve its growth vision, Bangladesh will need a high productive economy. Human capital development that is responsive to labour market for higher level skills…will be crucial," said Tembon.
According to the World Bank report, Bangladesh needs to create quality jobs for about 20 lakh young people entering the labour force every year.
To reap the benefits of this growing labour force, investment in human capital is required.
The World Bank said the country needs to invest significantly in teaching, learning ICT facilities, among other areas, to create competitive workforce.
To sustain the growth, higher labour productivity is also essential so that the economy can diversify beyond garments exports and remittances.
Growing sectors such as export-oriented light engineering, shipbuilding, agribusiness, information and communication technology, and pharmaceuticals will require skilled professionals in managerial, technical and leadership positions.
Senior Economist of World Bank Bernard Haven said, "Labour market surveys repeatedly show that employers struggle to fill high-skill positions such as technicians and managers."