Macroeconomic Analysis

Key Economic Variables

Targets for FY Actual in FY Targets for Dec Targets for Jun
(Figures in %) 20 20 20 21
GDP Growth Rate 8.2% 5.2% 8.2% 8.2%
Inflation 5.5% 5.65% 5.04-5.93% 5.04-5.93%
CRR 5.5% 4% 4% 4%
Repo Rate 6% 5.25% 4.75% 4.75%
Reverse Repo Rate 4.75% 4.75% 4% 4%
Bank Rate NA 5% 4% 4%
Broad Money Growth Rate 13% 12.7% 14% 15.6%
Domestic Credit Growth
Rate 17.4% 13.7% 15% 19.3%
Private Sector Credit Growth 14.8% 8.6% 11.5% 14.8%
Public Sector Credit Growth 37.7% 53.3% 35.6% 44.4%
Source: BB, MPS FY20-21

Inflation

Breakdown of Inflation 2H FY2020

Breakdown of Inflation Actual Inflation (%) Trend
General Inflation 5.65 Stable
Food Inflation 5.52 Stable
Non — Food Inflation 5.85 Stable
Core Inflation^ 5.76 Stable
Source: BB, MPS FY20-21

Historical Inflation Figures

Inflation
(Figures in %) Actual Inflation Target Inflation
1H FY2015 7.35 6.0 — 6.5
2H FY2015 6.99 NA
1H FY2016 6.40 6.50
2H FY2016 6.19 6.20
1H FY2017 5.92 6.07
2H FY2017 5.52 5.80
1H FY2018 5.44 5.80
2H FY2018 5.78 5.50
1H FY2019 5.54 5.4 — 5.8
2H FY2019 5.47 5.3 — 5.6
1H FY2020 5.59 5.50
2H FY2020 5.65 5.50
1H FY2021 NA 5.04-5.93

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Balance of Payments
Actual in FY Targets for FY Actual YoY Targeted YoY
2020 June 2021 Growth FY Growth FY
(USD Mn) (USD Mn) 2020 2021
Trade Balance -17861 -18392 -12.8% -3.0%
Remittance 18205 18751 10.9% 3.0%
Current Account Balance -4849 -4876 5.0% -0.6%
Current Account Deficit as % of GDP -1.5% -1.3% NA NA
Gross International Reserve 36037 37000 10.1% 2.7%

Currency Exchange Rate

Currency 2-Oct-20 1 Year 6 Months

USD/BDT 84.63 -0.15% 0.27%
USD/INR 73.29 -2.92% 4.24%
Parameter Date Amount Unit YoY Change
Remittance 2020 Jan-Sep 15,511 USD Mn 15.4%
Foreign Exchange Reserve Sep 30, 2020 39,314 USD Mn 23.5%
Net Sales of National
Saving Certificate 2020 Jan-Aug 164 BDT Bn -42.6%
Broad Money Aug 20 14,154 BDT Bn 13.6%
Domestic Credit Aug 20 13,264 BDT Bn 13.4%
Private Sector Credit Aug 20 11,017 BDT Bn 9.4%
Call Money Weighted Average Rate as on Sep 23,
Average Rate Sep 30, 2020 2.66%   2020: 2.95%
Other Indicators

Interest Rate Spread

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%
Aug '20 July '20 June '20 May'20

Spread of all Banks Spread of SoCBs Spread of PCBs Spread of FCBs Spread of SBs

Interest Rate
Banks Aug '20 July '20 June '20 May'20
Spread of all Banks 2.87% 2.77% 2.89% 2.94%
Spread of State-Owned Commercial Banks 2.15% 2.24% 2.33% 2.23%
Spread of Private Commercial Banks 2.93% 2.77% 2.88% 2.97%
Spread of Foreign Commercial Banks 5.37% 5.29% 5.30% 5.39%

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Spread of Specialized Banks 2.03% 2.08% 2.10% 2.03%

Source: Bangladesh Bank

Source: Bangladesh Bank

Source: Bangladesh Bank

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Economic Growth Comparison
Item UoM FY 2017-18 FY 2018-19 FY 2019-20
GDP at Current Market Price BDT Crore BDT 2,250,479 BDT 2,542,483 BDT 2,796,378
GDP growth rate at (2005/2006) Percent 7.86% 8.15% 5.24%
constant price
General Index of Industrial 2005- 344.89 388.27 414.93
Production 06=100
Annual Per Capita GDP US$ $1,675 $1,828 $1,970
Annual Per Capita GNI US$ $1,751 $1,909 $2,064
GNI at Current Price BDT Crore BDT 2,353,108 BDT 2,656,092 BDT 2,930,426
NBR Tax to GDP Percent 9.17 8.81 10.75
Investment Rate (% of GDP) Percent 31.23 31.57 20.80
(a) Public Sector Percent 7.97 8.03 8.08
(b)Private Sector Percent 23.26 23.54 12.72
Domestic Savings Rate (% of GDP) Percent 22.83 25.02 25.31
National Savings Rate (% of GDP) Percent 27.42 29.50 30.11
Industrial /Mfg. Growth Rate of Percent 13.40 14.20 5.84
GDP
(a) Large & Medium Scale Industry Percent 14.26 14.84 5.47
(b) Small Scale Industry Percent 9.25 10.95 7.78
Agricultural Growth Rate of GDP Percent 3.47 3.15 2.08
Services (% of GDP) Percent 52.11 51.35 51.30
Exports of goods and services (% Percent 14.80 15.32 13.38
of GDP)
Imports of goods and services (% Percent 23.44 21.44 19.38
of GDP)
Total domestic outstanding debt Percent 15.82 16.89 18.29
(% of GDP)
Total Financing (% of GDP) Percent 3.89 4.51 4.84
FDI Inflow (Net) US$ Million $2,580 $2,540 $1,804
Portfolio Investment (Net) US$ Million $365 $172 $276
Domestic Credit BDT Crore BDT 1,021,707 BDT 1,145,932 BDT 1,302,635
Revenue Collection (NBR) BDT Crore BDT 206,407 BDT 223,892 BDT 218,406

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 Monetary Aggregates
Item UoM FY 2017-18 FY 2018-19 FY 2019-20
(a) Narrow Money (M1) BDT Crore BDT 254,891 BDT 273,293 BDT 328,264
(b) Broad Money (M2) BDT Crore BDT 1,109,978 BDT 1,219,609 BDT 1,373,735
(c) Currency in circulation BDT Crore BDT 154,941 BDT 170,387 BDT 208,094
Reserve Money BDT Crore BDT 233,740 BDT 246,188 BDT 284,483
Growth of Money Supply Percent 9.24 9.88 12.64
Monetary Base to Money Supply Percent 21.06 20.19 20.71
ratio
Reserve Money Multiplier Times 4.75 4.95 4.83
Bank Rate Percent 5 5 5
Deposit Rate (weighted average) Percent 5.5 5.43 5.06
Commercial Lending Rate Percent 9.95 9.58 7.95
(weighted average)
Balance of lending & deposit rate Percent 4.45 4.15 2.89
Call Money Rate (monthly Percent 3.41 4.55 5.01
average)
Inflation Rate (weighted Avg.) Percent 5.78 5.48 5.65
Dollar Conversion Rate 1$=Tk BDT 82 BDT 85 BDT 85
Value of Import US$ Million $58,865.30 $59,914.70 $54,784.70
Value of Export US$ Million $36,668.17 $40,535.04 $33,674.12
Balance of Trade US$ Million -$22,197.13 -$19,379.66 -$21,110.58
Foreign Exchange Reserve US$ Million $32,916.45 $32,716.51 $36,037.03
Remittances US$ Million $14,978.86 $16,419.63 $18,205.01
Government Borrowing
(a) Bangladesh Bank BDT Crore BDT 21,877 BDT 31,656 BDT 41,716
(b) Deposit Money Banks BDT Crore BDT 156,214 BDT 173,335 BDT 233,902
Source: DSE

5
Macroeconomic Forecast
Reviving the Economy

The COVID19 put an immense strain on the economy. To respond to the crisis, Govt. and
Bangladesh Bank have come out with expansionary policies. From the limited amount of
data available, it is obvious that Bangladesh economy was in the middle of an
unprecedented crisis. But, from the beginning of the crisis Bangladesh Govt and Bangladesh
Bank have taken several policy stances to overcome the recessionary pressure. Different
international agencies have predicted very conservative GDP growth ranging from 1.6% to
3.8% for the FY20-21. But the projection from the Govt. side is 8.2%. A USD 12Bn (3.7% of
GDP) stimulus package for the economy from the Govt. and significant policy cut from the
Bangladesh Bank can help the economy to continue its growth momentum. We expect to
see 6% GDP growth for the FY20-21 in real term.
Our Projections are based on the following –
Bangladesh opened its economy in June 2020 after two and a half months shutdown in
response to the COVID19 pandemic immediate response. Currently, the economy is almost
in its full form. The offices, factories and manufacturing plants are running on their full
capacities. The major export revenue source garment industry is running on full capacity
since mid-April to serve the international demands even though there were setbacks since
March regarding the order cancellations from major buyers. Remittance saw tremendous
growth during the global lock down period, the reason can be many but most positive one
for the Bangladesh Economy is foreign labor forces are now preferring legal ways to send
money in Bangladesh which increased foreign currency reserve to USD 40Bn. Two major
festivals of Bangladesh have been celebrated countrywide by following the safety
precautions with almost the same enthusiasm as previous years. The consumptions and
productions are in full form, people are saving a lot but expending much on safety and
health. The COVID death rate is far lower than other neighboring developing and developed
countries of Asia. The COVID death rate for Bangladesh is 34 per million, for India it is 83.
Given, all of these, we can expect that there is good possibility that Bangladesh can reach at
6% GDP growth in FY20-21.
Long Term Mega Projects Bet