of GDP, which ideally should be at the range of 40-42 percent. Bangladesh lags behind most countries with similar economy in this indicator. One of the main reasons for this deficiency is the prevailing low private investment, which is the key to sustained growth. Public investment alone is not in a position to ensure good foundation for development. Currently Bangladesh's investment accounts for 31.47 percent of the GDP, of which 23.25 percent belongs to private sector. Ideally this should have been around 28 percent. The share of investment in GDP, however, has recorded a slight decline in 2018 compared to previous year.
The 2018 GDP value of Bangladesh is estimated at USD 275 billion, compared to 221.42 in 2016, a 24.2 percent increase in less than 2 years. The Current GDP size makes Bangladesh 43rd largest economy against 58th in 2010. In 2009 the GDP size was around USD 100 billion. The country has upgraded its economy by 15 steps by global ranking in just 8 years. On the other hand it took 38 years for the country to attain a USD 100 billion GDP since 1971. The country had to come across a long way to attain this progress. In 1960, during Pakistan regime, more precisely, during Ayub Khan's 'Decade of Progress' this country had a GDP of USD 4.03 billion! Even in 2005, in the terminal year BNP-Jamaat Alliance government Bangladesh's GDP amounted to USD 69.44 billion. Historical data show that the GDP in Bangladesh averaged 45.68 USD Billion from 1960 until 2016.
Table 3: Year-wise GDP (In billion USD)
The sectoral share of GDP has changed over time. In 1951-60 agriculture accounted for 62 percent of GDP value against 5 percent belonging to industry. The 2017 GDP composition is 29:14 in favor of industry. Service sector accounts for the overwhelming 57 percent of that. However, agriculture in Bangladesh continues to employ around half of the labor force. Increased mechanization of the sector will supposedly converse the employment scenario.
Current GDP value of Bangladesh represents 0.36 percent of the world economy. The Bangladesh share of GDP in Global GDP (PPP) has recorded sustainable increase since 2012. Against 0.46 percent in 2012 the 2017 share accounted for 0.54 percent. By 2022 that is projected to reach 0.64 percent.
Table 4: Bangladesh share in global GDP (PPP) (%)
Per capita GDP
The per capita GDP (nominal) is projected at USD 1754 in 2017-18, USD 144 or 8.9 percent more than that in the previous year. The country is among the very few in the world that has sustainably kept itself above 7 percent growth rate for three consecutive years. As an important growth indicator the per capita income of the people of Bangladesh has recorded a net increase of 108 percent during 2006-2016. More interestingly, Bangladesh has surpassed Pakistan in this indicator 11 years ago in 2006. The per capita GDP measured in terms of PPP in 2017 is USD 4210. Bangladesh's global rankings in per capita GDP (nominal) and GDP (PPP) are 145 and 139 among 2002 nations respectively.
Table 5: Per capita GDP in Bangladesh by year (USD)
It is evident from the Table that during Pakistan regime the per capita GDP was as low as USD 88.69 that increased by around 20 times by now. The highest increases took place in the current decade. Conservative estimates suggest that the indicator will increase further to around USD 2200 by 2021.
What should be the inflation rate of a dynamic economy is an important question of which the economists and monetary policy makers do not have any clear answer. Some suggest that the appropriate inflation rate should range between 1 and 4 percent, while others opine that for a dynamically proceeding economy that needs to be in the range of 3-5 percent. The ultimate inflation goal actually needs to be determined based on various factors. However, the basic consideration must address optimal comfort to the majority of the population on a sustained manner. The government needs to be extremely careful about the consumer prices going beyond the reach of the common mass in the name of developmental expenditures or promoting income of a certain group avoiding the impact of that income on the market due to additional millions or billions of Taka coming to the market mismatching the commodity-money ratio. There should not be any decision for any short-term political goal to increase wages and benefit packages of a section of people that may burden the other millions of the people. It is a matter of balancing the money flow with the goods flow in a judicious manner.
Bangladesh has been successful in reducing inflation rate from the record highest of around 11 percent in 2011-2012 to 5.4 percent in 2016-17. Understandably, this still remains higher than the ideal benchmark. The current FY experiences even some elevation of this indicator owing to increased salary and benefit packages for the public servants. The fair intention behind might be to combat corruption. However, experiences so far do not demonstrate any positive correlation between salary increase and reduced corruption or increased efficiency in the public agencies. Everything in the public offices remained the same although the tax payers are paying for their services more and more as the time passes. The prices of essentials are high enough. The people's purchasing capacity has gone up. But what about the retired people who are dependent on a fixed amount for their living? Moreover, salary increases are not coordinate among the public and private sectors that impacts negatively on the lives of majority of the employees in the private sector.
Table 6: Inflation rates
Source: Bangladesh Bank
The inflation rate this year already reached 5.68 percent. Many suggest that as an impact of natural calamities that took place in the recent past. Note that these natural calamities and loss of agricultural production that has impeded economic development is a result of corruption in construction and maintenance of the flood control infrastructures. The inflation rate may increase to around 6 percent depending on the level of 'efficient' measures undertaken by the bureaucracy. Since increased inflation rate reduces income efficiency, it is an imperative that appropriate measures are undertaken in time to keep that rate at a tolerable limit. This is related to various fiscal measures and economic policies. As of now the plan is to confine average inflation rate within 5.5 percent by the end of current FY.
The concerned agencies need to undertake appropriate policies and ensure implementation to rein the inflation rate keeping in mind the forthcoming national Parliamentary elections. Let the prices of essential do not elevate to the extent that would undermine huge achievements that the government has made over the years. As in all other low income countries, the Bangladesh reality also demonstrates that the price hike of essentials via whatever means that might happen ultimately makes governments unpopular. The peoples' first priority in the 'Third World' countries is to see their kitchen in order.
Table 7: Inflation by country in 2017
The current inflation rate in Bangladesh substantially exceeds the global average figure which ranges between 2.7 and 4.08 percent during 2012 and 2018. On the other hand Bangladesh's current inflation rate is the highest in South Asia, against 4.28 percent in India and 3.25 percent in Pakistan. Among Asian economies lowest inflation has been recorded by China (2.1 percent) and Highest by North Korea (55 percent).
Foreign trade and remittances constitute one of the major sources of income and expenditure. Export continues to remain the most reliable source of foreign currency income. Among South Asian countries Bangladesh has emerged as one of the most promising export earning economies. Apparel products constitute major export item for quite some time. Currently Bangladesh is the second largest apparel exporting country in the world after China. At the backdrop of drastic increase in labor costs in China overwhelming share of the US and EU buyers are planning to shift their focus on Bangladesh which in near future may place Bangladesh as the top apparel exporter superseding China. Notably, even in the 1990s Bangladesh garments export potential could not be expected to be in the global frontline export market. In 2006 Bangladesh emerged as the sixth largest garments exporter with only 2.8 percent of world export of apparel products. However by 2011 Bangladesh surpassed India, EU, Hong Kong and Turkey and emerged as the second largest garments products exporter. Ready-made garments and textiles account for around 90 percent of country's export earnings, followed by footwear (2.3 percent) and paper yarn, woven fabric (1.7 percent) and Fish (1.6 percent).
Table 8: Share of Bangladesh's major export items (2016)
Historically Bangladesh had been experiencing negative trade balance. The difference between export earnings and import expenditure reduced considerably over the years, although. According to some estimates "Bangladesh shipped USD 38.6 billion worth of goods around the globe in 2016, up by 148.1 percent since 2009…" Export accounts for around 5.6 percent of the country's economic output. The 10 export commodities mentioned above account for around 97 percent of Bangladesh's global export earnings. Per capita export earnings in 2016 amounted to around USD 250, which was as low as USD 50 in the 80s.
Table 9: Export by country in South Asia (2017)
Bangladesh emerged in recent years as the second largest export earning country in South Asia surpassing Pakistan. Current export earning of Bangladesh exceed that of Pakistan by more than 12 billion. India with huge economic strength continues to dominate the chart.
Table10: Bangladesh export- import by year
Source; i) BB; ii) Statistical Portal
There are slight divergences in BBS export data. Table shows that in 2017 Bangladesh earned USD 36 billion from export, which is almost 3 times more than that in 2007. During this period export earnings recorded continued growth. The import expenditure generally had a growing trend with some exceptions.
Table 11: Remittances by FY
Source: Bangladesh Bank
*Up to March 2018
Remittances continue to remain as one of the important contributors to GDP. During 1976-2016 that averaged at 4.56 percent; lowest recorded in 1976 (0.19%) and highest in 2012 (10.59%). In absolute terms remittances also recorded a steady growth (with some exceptions) during last five years. During 2012-2017 those averaged USD 1185.78 million. In absolute terms highest value was recorded in 2014-15 (USD 15316.91 billion). Table shows that in the following years the flow slowed down to some extent. Up to March of the current FY remittances inflow amounted to 10.8 billion. If we consider global remittances scenario, Bangladesh remains considerably below the major recipients. India and China have remittances inflow in the range of USD 63-65 billion a year. Third World countries like Philippines, Mexico and Nigeria surpass Bangladesh considerably. The implication is that despite remittance being the second foreign currency income source after RMG, it has great potential to supersede any other sector, including RMG. The policies need to aim at facilitating easy inflow of those and at the same time ensuring better quality manpower export. Currently more than 80 percent of the expatriates are unskilled laborers with poor wage structure. The manpower export procedures are also seldom conducive to career jobs abroad. Currently remittances account for around 44 percent of our export earnings. In 2010 the corresponding figure was as high as 68 percent. According to World Bank estimates Bangladesh's current global ranking in Remittances inflow is 7, which may be increased considerably via appropriate policies to facilitate inflow of foreign income by the expatriates.
According to recent estimates currently Bangladesh has one of the largest oil and gas reserves in Asia-Pacific Region. Expansion of the maritime exclusive economic zone following resolution of disputes with Myanmar and India Bangladesh has become a potential contender of energy-resource country. But the most remarkable achievement of Bangladesh over the last decade in energy sector pertains to the rapid improvement of its electricity generation and distribution capacity. During last decade the electricity production has increased three-fold and exceeded 16000 MW in 2016-17. Currently, more than 90 percent of the population enjoys electric facilities in Bangladesh. The government plans to ensure electricity to all households by 2021, which seems to be quite feasible, provided that the on-going projects and mega projects are properly implemented and the existing facilities are maintained and security in this sector is ensured. The use of solar energy is one of the potential bases for electricity self-sufficiency. Currently Bangladesh imports considerable amount of electricity from India for meeting its increasing demands. The nuclear and coal-based large electricity plants are being constructed. Once accomplished, these installations will provide substantial amount of electricity to the nation. Specifically, with the accomplishment of new power plants, the scenario will improve provided that high system loss and corruption in this sector are reduced or abolished. The Power Development Board's annual 'system loss' amounts to Tk 10 billion, which is equivalent to 22 percent of the generated amount of electricity. Corruption, obsolete distribution and production system and many other factors are primarily responsible for such loss.
Despite remarkable successes in various sectors, the GDP-investment ratio in Bangladesh remains stagnated. Currently public investment has reached 30 percent of GDP due to proactive developmental programs and resource allocations to public initiatives. Corresponding ratio for the private sector remains as low as 20 percent, which is one of the most important adversities in development. Private sector ideally acts as the catalytic agent in developmental process in a market economy. Failure to attract private investment invites long-term adversities in the economy. In an ideal situation the government instead of getting involved in business needs to create favorable environment for the private sector at all levels (multinationals, SMEs, etc.) for business and ensure free and fair competition. Bureaucratic hindrances and corruption increase time and costs for private investment in Bangladesh. The Investment agencies should work in a more coordinated manner (in collaboration with other agencies, ministries) to ensure basic requirements of the investors and potential investors. Although FDI has increased from 793 million USD in 2006 to 2003.53 million in 2016, the progress is one of the lowest in Asia. CIA World Fact Book reveals that of the 117 sample countries, Bangladesh's ranking is 90 against 66 for Pakistan, 21 for India and 3 for Hong Kong. For sustained growth FDI inflow needs to be accelerated. International corporate agencies prefer to work in dynamic environment. That environment encompasses good policies, less paper works, transparency, easy information exchange facilities, responsiveness, and professionalism. We need to review, re-examine, modify or change our conventional approaches at the backdrop of a dynamic and professional global system to cope with the advanced globalization process. The initiative to create special economic zones all over the country is an intelligent initiative. However, unless modern concepts are digested by the bureaucracy and implemented accordingly those zones may not produce expected results. The bottom line should be to enhance GDP growth rate to double digit in near future for materializing 'Vision 2041'.
All-round and sustainable development requires inclusive and participatory developmental process. Enhanced inclusiveness and participation of its female population is the key to Bangladesh's rapid development. Unlike other countries of South Asia and many other 'Third World' countries Bangladesh's recent development is characterized by more and more inclusion of its female population in the mainstream developmental process. This process of inclusiveness was neglected for centuries due to social and religious barriers.
Once one of the least developed countries that could hardly think about feeding its own people, Bangladesh now has entered into the ambitious club of economic emancipation and social equity. Improved socio-economic status of the women through their capacity building and active involvement in the production process and social systems had enormous impact on the pace of development of the country.
In fact Bangladesh has been more successful than any other 'Third World' country in undertaking successful measures in mainstreaming women, ethnic and religious minorities, vulnerable people living in the remote char and hilly areas and the physically challenged people in the developmental process. This process has gained unprecedented momentum during last decade owing to appropriate policies of Hasina Government despite political, ideological and bureaucratic hindrances. Enormous political efforts and foresightedness coupled with courage and ability to address challenges of different dimensions and from different angles are the key to all success stories of the political leadership.
According to UNHDR 2017 Bangladesh has entered the club of Medium Human Developed Country for 13th consecutive year. One of the vital indicators in determining country position is gender equity. In 2017 Bangladesh secured 47th place among 144 countries under consideration in reducing gender gap against 72nd in 2016, a huge progress in just a year. This is the top most position in South Asia. Table below shows ranking of the South Asian countries.
Table 12: Global and regional gender gap ranking of South Asian countries 2017
Source: Global Gender Gap Report 2017. World Economic Forum.
It is evident that the South Asian countries generally have similar scoring of around 660-670. Two most visible exceptions are Bangladesh and Pakistan and here Bangladesh surpasses Pakistan with a huge margin. This is also demonstrative of pro equity and empowerment policy initiatives of Sheikh Hasina Government. Another visible exception of Bangladesh in this respect is its high ranking in political empowerment category. Of the 155 countries under consideration Bangladesh ranked 7th superseding many developed countries of the West.
However the challenge remains in women's economic participation level. According to the same report Bangladesh ranked 129 in 2017, which is considerably below the 2016 ranking of 72. The reasons behind this drastic change are not well explained though in the report.
Women empowerment is a multidimensional aspect that involves education, health, rights and economic emancipation of women at all levels, with special focus on the most vulnerable segments of women. Improvements in all above relating to women lead to improved decision making by the grassroots women and impact positively on child education and, health and sanitation in general. As a matter recurring response the life expectancy increases, child and maternal mortality reduces and the basis for a healthy nation is created. The average life expectancy in Bangladesh is more than 72 years now compared to 45 years in 1960. Also in the subcontinent, Bangladesh surpasses India (68 years) and Pakistan (66 years) in this indicator.
Automation is one of the pre-requisites for electronic governance, which in turn aims at reducing corruption and ensuring better service delivery. Government has established around 5300 digital centers all over the country with network extended to the grassroots levels. The ICT training facilities have opened windows for the young generation to get greater employment and income generating opportunities. In the public offices this initiative should have created greater efficiency and better service delivery provided that digitization in those offices could be a complete process. The beneficiaries of conventional paper works are vehemently working against any automation process, for which despite enough scope for complete digitization there are attempts to destroy or decelerate the process in many public agencies. This makes the service recipient's life even more difficult. A single signature may cost much more than many signatures in the past. The illegal payments to the concerned public servants for services exceed the actual value of the service by several hundred times. Illegal middleman business is being arranged by the bureaucratic syndicate in the public offices to extract money from the tax payers. On the other hand many procedural arrangements continue to remain complicated and non-transparent to the public for which the service recipients are compelled to seek assistance of the 'Dalals'. The poor automation arrangement is evident in Dhaka streets, where automatic signal systems seldom work.
ICT sector's achievements must be linked to the concept of 'Digital Bangladesh' which is an integral part of the government's 'Vision 2021' that envisages eight broad goals, including democracy, decentralization, good governance, empowerment, economic development, etc. For attaining the above goals transparency, accountability, responsiveness and effectiveness are crucial. In the modern era those ingredients are achievable only through direct and indirect participation of people which a digitized and automated system can provide. Here lies the justification of the concept of 'Digital Bangladesh'. As of now almost all public offices have been computerized, the information collection and dissemination system has improved. In the rural areas GOB conducted computer training programs are in operation.
In 2017 about 80 percent of country's population used mobile phones, which is around 20 percent more than that in the previous year. As regards the costs of mobile phones, in 1994 each of those was sold at Tk 80,000 to Tk 130,000. Now a better quality can be bought for Tk 700. Abolition of monopoly over import and sale and service provision have reduced the costs of mobile phones and service charges and made those available at the grassroots level. Currently the more than 75 percent of the people of Bangladesh enjoy this digital facility. In 2017 more than 34 percent of the adult population of Bangladesh exchanged money through digital methods. For Asia this ratio is 27.8 percent. This is indicative of modernization of social behavior of the people and improvement of their choices.
The internet users account for around 60 percent of the population of Bangladesh. These instruments have made the economy more dynamic and have huge positive impact on production, transportation and marketing of products. Agricultural produce marketing has benefitted enormously due to widespread use of mobile phone and internet. The domestic market has direct communication with the international buyers and investors which has eased international trade and commerce. Bangladesh's digitization program has created new services like telemedicine services, video treatments, automated accounting and video conferences for business purposes. In almost all upazilas and unions thousands of information centers have made people accessible to needed information. Around ten thousand village post offices have been converted into e-centers for providing training and other services to the rural people. The information cells at the district, upazila and union levels are revolutionary changes in the profile of rural Bangladesh. For making 'Digital Bangladesh' more people oriented and productive, regular maintenance of the created facilities needs to be ensured.