The Asian Development Bank has raised the 2022 forecast for Bangladesh.
In Bangladesh, exports and imports grew more than projected in the ADB's 2021 update thanks to a surge in global demand for clothing, ADB says in its latest estimates presented in a regular supplement of the Asian Development Outlook (ADO) 2021.
Faster import growth widened the trade deficit, but growth will be supported by private investment with imports of capital machinery and raw materials for garments.
The expected implementation of fiscal and monetary stimulus adds to pressure from higher fuel prices, it adds.
However, South Asia is forecast to expand less than projected in the Update for 2021, reflecting a modest downward revision to forecast GDP growth in India with manufacturing now projected to grow more slowly than anticipated in the Update.
In contrast, other economies in the region, like Bangladesh, have benefitted from higher global demand and rebounding domestic activity with Covid-19 largely contained across the subregion.
Whereas, the Asian Development Bank also warned that the highly mutated Omicron coronavirus variant could have a "substantial" economic impact, as it trimmed its 2021 and 2022 growth forecasts for developing Asia.
"As it (Omicron) appears to be significantly more transmissible than earlier variants, its economic impact could be substantial", read the report.
Vaccination rates have increased across developing Asia in recent months, with nearly half of the population fully protected against Covid-19 at the end of November, compared with less than a third at the end of August, the lender said.
That has enabled many economies to start reopening, boosting manufacturing activity and trade in the region.
However, coverage remained uneven -- 20 economies still have less than 40% of their populations fully vaccinated, "leaving them susceptible to renewed outbreaks".
And the region still lagged the nearly 60% coverage in the United States and more than 67% in the European Union.
"New pandemic waves could reverse the current reopening trend in many economies owing to still-insufficient vaccination coverage," the ADB warned.