Price hikes in Bangladesh have compelled consumers to double their spending on essentials compared to pre-pandemic levels, reducing discretionary expenditure, according to the Mastercard Economics Institute (MEI).

The institute also reported significant consumer spending on groceries and electronics via digital channels post-pandemic.

David Mann, Chief Economist for Asia Pacific at MEI, presented these findings during a roundtable discussion titled ‘Global and Bangladesh Outlook and Risks’.

He highlighted ongoing economic challenges in Bangladesh, citing weak domestic and external demands.

MEI forecasts a Gross Domestic Product (GDP) growth of 5.8 per cent for FY2023–24, moderating slightly to 5.7 per cent for FY2024-25.

Mann noted that persistent inflation has eroded purchasing power, projecting a decrease to 8 per cent in FY2024–25 from 9.8 per cent in FY2023–24.

Looking ahead, Mann anticipated an increase in the bank interest rate to 9 per cent in FY2024–25, up from 8.5 per cent in FY2023–24, which is expected to help mitigate inflation.

He praised initiatives by Bangladesh Bank in May, such as the crawling peg exchange rate and aligning official and unofficial exchange rates, which bolstered remittances but cautioned about potential challenges from higher US dollar rates.

Syed Mahbubur Rahman, Managing Director of Mutual Trust Bank PLC, stressed streamlining the supply chain to combat inflation.

Syed Mohammad Kamal, Country Manager of Mastercard Bangladesh, noted that their remittance business accounted for 20 per cent of the country’s remittances, attributing this to the positive impact of the crawling peg exchange rate on the economy.

The discussion also covered insights into growth projections, inflation trends, interest rates, foreign exchange dynamics, export performance, remittance flows, excess savings, credit markets, shifts in consumer spending, digital adoption, and travel patterns.

In concluding remarks, former Bangladesh Bank governor Atiur Rahman highlighted Sri Lanka’s economic recovery, attributing it to political will, macroeconomic reforms, monetary policies, and tourism improvements.

Established in 2020, the Mastercard Economics Institute analyzes macroeconomic trends with a focus on consumer perspectives.