Economy Amazing Bangladesh01 January 2021
While Bangladesh was a part of Pakistan, its economy stagnated. According to Pakistan Statistical Survey, in 1968 per capita income of west Pakistan ( now Pakistan) was US$ 99.80 dollar where only US$ 40 dollar in east Pakistan ( now Bangladesh). Currently, Bangladesh economy is ahead of Pakistan in economic affairs. Nevertheless, battle regarding much- discussed GDP issue between India and Bangladesh has, in the meantime, become talk of recent time. In FY 2018-19 Bangladesh export income was US$ 40.3 billion where Pakistan saw US$ 23 billion only. Up to October 08, 2020, foreign exchange reserve of Pakistan was US$ 13 billion where reserve in Bangladesh recorded at US$ 40.4 billion. What is worrying that Pakistan for the last 49 years did never experience surplus current account balance .
There is no denying that Bangladesh has experienced phenomenal growth in GDP-over 7 per cent over the last few years when it was negative 5.48 per cent in 1971. The total net export of goods and services was negative 27.62 per cent in 1971 and 2.20 per cent in 2016. As of late, the global market share doubled from the years 1995 to 2016. It is now the world's second largest apparel exporter after China and fifth largest recipient of cash remittance from all over the world. Bangladesh has set a landmark record in poverty alleviation by reducing the level by 24.6 per cent between 2000 to 2016, which accounted for more than 20.5 million people. The total adult literacy rate increased from 29.23 per cent to 72.76 per cent from the year 1981 to 2016 and simultaneously life expectancy increased from 53.92 years to 72.22 years between 1981 and 2016.
The International Monetary Fund (IMF), in the meantime, announced economic indicators of some economies. One of emerging economies -Bangladesh was brought under projection made by IMF. In the study, many advanced economies in the world lagged behind in terms of economic growth compared to Bangladesh. Proudly saying, Bangladesh, in recent years, has become role model to the developed countries. The economic growth in Bangladesh is likely to surpass her challengers shortly, no doubt. The IMF in its October 2020 report titled "World Economic Outlook: A Long and Difficult Ascent" notes that Bangladesh has overtaken India in terms of per capita GDP. In 2015, just five years ago, India's per capita GDP was around 40 percent higher than Bangladesh.
India's GDP will be contracted by 10.3 per cent and per capita income by 11.2 per cent in 2020-21 while Bangladesh GDP will increase by 3.8 per cent and per capita income will reduce by 2.9 per cent, according to IMF projection made recently. In nominal US dollars, India's per capita GDP is projected to be US $ 1,877 in 2020-21, compared to US$ 1,888 for Bangladesh. The impressive economic success of Bangladesh has become a matter of discussion in the Indian media and beyond. A report by Oxford Economics released earlier this month
( November, 2020) said that India would be the worst -affected economy even after the pandemic eases, stating that annual output would be 12 per cent below pre-virus levels through 2025. India - a country of 1.3 billion people is in great problem with seeing high unemployment rate amid pandemic. Bangladesh since beginning pandemic performed better than India in respect of saving man's lives and economy.
The IMF Outlook also indicates that in 2021 India will see a rise of its per capita GDP by 8.8 per cent while Bangladesh will see a rise of 4.4 per cent. As a result, in 2021 India's per capita GDP will reach US$ 2,030 and Bangladesh US$ 1,990. The IMF report made projection till 2025 saying that India in 2024 will surpass Bangladesh and in 2025 Bangladesh will be ahead of India in terms of per capita GDP. In terms of Purchasing power Parity (PPP) based per capita GDP, India is ahead of Bangladesh. India's per capita GDP at PPP is US$ 6,284 and Bangladesh US$ 5,139. Since 2009, Bangladesh has been achieving more than 6 per cent growth. The country graduated to a lower middle-middle-income nation in 2015 while in 2018 the country met the UN criteria for graduating from the least developed country status by 2024. Beyond self- sufficiency, Bangladesh is now the fourth largest in rice production, second largest in jute production, fourth largest in mango production, fifth largest in vegetable production and fourth largest island fisheries in the world. The GDP of Bangladesh has grown from US$ 102 billion in 2009 to US$ 302 billion in 2019. Foreign Direct Investment has also increased from US$700 million in 2009 to US$ 3613 million in 2018. In 2018, Bangladesh was also the second recipient of Foreign Direct Investment (FDI) in South Asia.
The IMF report focuses on some limitations of Bangladesh economy. The report notes that Bangladesh's revenue-GDP ratio is only 8.17 which are the lowest among South Asian countries. Total government expenditure is also lowest in South Asia and stands at only 14.97 per cent of GDP. Investment-GDP ratio is 27.73 per cent much lower than Nepal and Bhutan. Investment-GDP ratio is close to neighboring India ( 27.77). Despite facing many challenges, the economy is moving forward by leaps and bounds. Right now, a few precautionary measures have to be taken in hand aiming to address ongoing economic challenges. One of key challenges is to reduce the amount of foreign loans. According to newspaper report, in 2019-20 FY , foreign loans was recorded 13.34 per cent of GDP. In present, foreign loans stand at US$ 4,402 crore indicating 15.4 per cent of GDP. If it crosses over 20 per cent of GDP , there appears red signal for our economy. It is important to note that in 2009, foreign loans was only US$ 712 crore. Bangladesh might face difficulties in the days to come in terms paying back the loan amount for lower revenue income. Now, unpaid foreign loans of Bangladesh stand at US$ 34.5 billion.
Bangladesh is also ahead of South Asian and other least developed countries (LDCs) in several social indicators. This has widely helped Bangladesh to qualify for graduation from the LDC category in 2018 by fulfilling all three criteria set by the United Nations. In 2015, Bangladesh became a lower middle income country from a low-income country as per the World Bank's classification of countries. The country made better performance in achieving the Millennium Development Goals ( MDGs) between 2000-2015. Now Bangladesh aspires to become a developed country by 2041. By 2024, Bangladesh is expected to come out of the LDC category. Since 2015, Bangladesh has been working towards fulfilling the Sustainable Development Goals (SDGs) by 2030.
The long-cherished Padma multipurpose bridge has already been visible. The 6.15 km long bridge is expected to be opened for traffic in 2022 next. With installation of the last span, the bridge ended its close to 90 percent works. It is a must say that the bridge has changed economic fate of the people living in least developed southwestern parts of the country. Besides, the bridge would widely support in respect of regional connectivity.
(Md Mazadul Hoque is a banker and economic analyst. E-mail: email@example.com).