Fast Market Research recommends "Bangladesh Business Forecast Report Q2 2014" from Business Monitor International, now available

Boston, MA -- (ReleaseWire) -- 05/02/2014 --While the intense political violence has recently abated, we believe that stability will still be hard to come by due to the ongoing security crackdown on opposition activists and the war crime tribunals against Islamist leaders. As such, we maintain our short-term political risk rating of 62.1 out of 100.

The political turmoil in recent months has weighed heavily on investment. As such, we have downgraded our real GDP growth forecast from 6.5% to 5.7% for FY2013/14 (July-June).

We believe that the Bangladesh Bank (BB) is currently in a tough position, as the country is facing a rising inflation, but at the same time sluggish growth. We expect the BB to maintain a neutral policy stance for the remaining months of FY2013/14, and will keep its repo rate unchanged at 7.25%.

We are forecasting the government debt to GDP ratio to decline gradually towards an estimated 33.8% by FY2022/23, as the Bangladeshi government continues to consolidate its fiscal position.

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We are forecasting remittance inflows to contract by 4.5% year-onyear (y-o-y) in FY2013/14, as Bangladesh's manpower exports will likely remain weak over the medium term. The continued slowdown in remittances will hurt Bangladesh's external accounts. As such, we have revised down our FY2013/14 current account balance forecast to 0.9% of GDP, from 1.6% previously.

Major Forecast Changes

As a result of the heightened political turmoil, we have downgraded the country's short-term political risk rating from 65.8 out of 100 to 62.1 out of 100 and our real GDP growth forecast from 6.5% to 5.7% for FY2013/14.

While we initially forecasted a 50 basis points cut in interest rates to support growth, rising inflationary pressures will likely hold back such a move. As such, we forecast the central bank to maintain a neutral monetary policy stance for the remaining months of FY2013/14, and will keep its benchmark repo rate unchanged at 7.25%.

We have revised down our FY2013/14 current account balance forecast to 0.9% of GDP, from 1.6% previously, as we expect manpower exports to remain weak over the medium term.

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