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Bangladesh made a rapid recovery from the Covid-19 pandemic supported by prudent macroeconomic policies, but its economy faces challenges of global economic uncertainty, inflationary pressure, energy shortages, a balance-of-payments deficit, and a revenue shortfall, the World Bank has said in a report.

The Bangladesh Development Update titled 'Trade Reform: An Urgent Agenda', said that accelerating the implementation of structural reforms, including trade reforms and export diversification, will help Bangladesh navigate the current challenges and sustain growth momentum, reports Xinhua news agency.

It said growth in Bangladesh is expected to accelerate over the medium term, as inflationary pressure eases, external conditions improve, and reform implementation gains momentum.

According to the biannual report, Bangladesh's real GDP growth is expected to decelerate to 5.2 per cent in the current fiscal year 2022-23 (July 2022-June 2023) due to rising inflation, tighter financial conditions, disruptive import restrictions and global economic uncertainty.

It further said growth is expected to pick up to 6.2 per cent in fiscal year 2023-24.

Improving trade competitiveness for export diversification will be critical to achieving Bangladesh's aspiration of upper middle-income status by 2031.

"The ready-made garments sector accounts for about 83 per cent of Bangladesh's exports. The Covid-19 pandemic underscored the risk of over-reliance on a single sector," said Bernard Haven, World Bank senior country economist for Bangladesh and co-author of the report.

"Diversifying exports and improving competitiveness will help Bangladesh achieve upper-middle income status by 2031. For this, it will be important for Bangladesh to reduce both tariff and non-tariff barriers.

"A comprehensive reform program can strengthen regional integration, particularly with South Asia and Southeast Asia," he added.