Bangladesh's poor political situation will continue until the general election is held, probably in late 2000 or early 2001. The campaign of strike action by the opposition prevents any significant structural reforms being introduced, and hinders the development of the gas sector. The economy is underwritten by donors. After the election, the political situation will improve, at least temporarily, and GDP growth will increase.
Key changes from last month
The political situation is likely to deteriorate as the general election approaches. The outcome of the election will depend on whether popular resentment towards the opposition's campaign of general strikes overshadows disappointment with the current government's achievements.
Economic policy outlook
The government will remain reliant on multilateral funding, and continued high levels of domestic borrowing raise the risk of inflationary pressures increasing if economic sentiment improved and demand for private-sector credit increased.
The EIU has increased its GDP growth estimate for fiscal year 1999/2000 (July-June) to 5.3%, and to 5.2% in 2000/01, when manufacturing and export performance should improve. Poorer than expected export performances so far in 2000 have led to the current-account deficit being increased to 1.4% of GDP in 2000, falling back to 0.9% in 2001.