Bangladesh has undergone a remarkable economic transformation in recent decades, shifting from one of the world’s poorest nations to a lower-middle-income country. Its economy has shown resilience and growth, despite facing challenges such as natural disasters and a large population.
Macroeconomic Outlook:
The economy has observed sustainable economic growth, exports have increased and foreign reserves have flourished over the decade in spite of the global economic crisis in 2008-09 and a series of natural disasters, to which Bangladesh is regularly susceptible. The Gross Domestic Product (GDP) of Bangladesh was worth US$ 174 billion in 2014.
Bangladesh has experienced average GDP growth rate of 6 percent over the decade. The average growth rate is projected at 7.4 percent over the Seventh Five Year Plan (2016-2020) period. Bangladesh exports increased to about US$ 35 billion in 2014, which is about 20 percent of GDP whereas, in 2009, the number was merely US$ 17 billion. Trade GDP ratio has progressed immensely and is now approximately 45 percent in 2014. The export friendly ecosystem in the country has played a vital role to make this shift happen.
Key Macroeconomic Trends
- Slower Growth: While Bangladesh has historically enjoyed robust growth rates, recent years have seen a deceleration. The global economic slowdown, supply chain disruptions, and domestic challenges have contributed to this trend.
- Inflationary Pressures: Rising inflation has eroded purchasing power and impacted consumer spending. Global commodity price increases and supply chain bottlenecks have exacerbated inflationary pressures.
- Current Account Deficit: The current account deficit has widened due to increased import costs and a slowdown in export growth. This has put pressure on foreign exchange reserves.
- Remittance Inflows: Remittances from overseas Bangladeshi workers remain a crucial source of foreign exchange, but growth in this sector has been uneven.
- Debt Sustainability: Rising public debt levels raise concerns about debt sustainability and fiscal space.
Challenges and Opportunities
Bangladesh faces several challenges:
- Infrastructure Gaps: Inadequate infrastructure, particularly in energy and transportation, hampers economic growth and competitiveness.
- Skill Shortages: The mismatch between education and job market demands limits productivity and innovation.
- Vulnerability to Climate Change: As a low-lying delta country, Bangladesh is highly vulnerable to climate change, posing risks to agriculture, infrastructure, and livelihoods.
Despite these challenges, Bangladesh also presents significant opportunities:
- Demographic Dividend: A young and growing population can be a source of economic dynamism and innovation.
- Digital Economy: The rapid expansion of digital infrastructure and services offers immense potential for growth and job creation.
- Regional Integration: Increased regional economic cooperation can boost trade, investment, and development.
Outlook
The macroeconomic outlook for Bangladesh is cautiously optimistic. While short-term challenges persist, the country’s long-term growth prospects remain strong. Addressing infrastructure bottlenecks, improving education and skills development, and mitigating the impacts of climate change are critical for sustaining growth and reducing poverty.
Key factors influencing the outlook include:
- Global economic conditions
- Commodity price trends
- Domestic policy measures
- Progress in infrastructure development
- Climate change impacts
It is essential to monitor these factors closely to assess the evolving macroeconomic landscape and adjust policies accordingly.
More: https://www.cpd.org.bd/downloads/IRBD/BDECONOMY04.pdf
Bangladesh Economic Data
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Population(million) | 163 | 165 | 167 | 169 | 170 |
| GDP(USD bn) | 351 | 374 | 416 | 460 | 436 |
| GDP per capita(USD) | 2,153 | 2,269 | 2,499 | 2,729 | 2,558 |
| GDP(BDT bn) | 29,514 | 31,705 | 35,302 | 39,717 | 44,908 |
| Economic Growth(Nominal GDP, ann. var. %) | 11.8 | 7.4 | 11.3 | 12.5 | 13.1 |
| Economic Growth(GDP, ann. var. %) | 7.9 | 3.4 | 6.9 | 7.1 | 5.8 |
| Private Consumption(ann. var. %) | 4.9 | 3.0 | 8.0 | 7.5 | 2.0 |
| Government Consumption(ann. var. %) | 13.4 | 2.0 | 6.9 | 6.2 | 8.5 |
| Total Investment(ann. var. %) | 6.9 | 3.9 | 8.1 | 11.7 | 2.2 |
| Industry(ann. var. %) | 11.6 | 3.6 | 10.3 | 9.9 | 8.4 |
| Unemployment(% of active population, aop) | 4.7 | 5.8 | 5.8 | 5.2 | 5.1 |
| Fiscal Balance(% of GDP) | -5.4 | -4.8 | -3.6 | -4.1 | -4.6 |
| Public Debt(% of GDP) | 32.0 | 34.5 | 35.6 | 37.9 | 39.8 |
| Money(ann. var. of M2 %) | 9.9 | 12.6 | 13.6 | 9.4 | 10.5 |
| Inflation(CPI, ann. var. %, eop) | 5.7 | 5.3 | 6.1 | 8.7 | 9.4 |
| Inflation(CPI, ann. var. %, aop) | 5.6 | 5.7 | 5.5 | 7.7 | 9.5 |
| Exchange Rate(BDT per USD, eop) | 84.95 | 84.72 | 84.86 | 103.02 | 109.75 |
| Exchange Rate(BDT per USD, aop) | 84.42 | 84.88 | 84.90 | 92.65 | 108.03 |
| Current Account Balance(USD bn) | -4.5 | -5.4 | -4.6 | -18.6 | -3.3 |
| Current Account Balance(% of GDP) | -1.3 | -1.5 | -1.1 | -4.1 | -0.8 |
| Merchandise Trade Balance(USD bn) | -15.6 | -16.4 | -32.5 | -28.9 | -9.7 |
| Merchandise Exports(USD bn) | 39.0 | 32.4 | 42.0 | 51.0 | 51.5 |
| Merchandise Imports(USD bn) | 54.6 | 48.8 | 74.5 | 79.9 | 61.2 |
| Merchandise Exports(ann. var. %) | 1.1 | -17.0 | 29.5 | 21.6 | 1.0 |
| Merchandise Imports(ann. var. %) | 0.1 | -10.6 | 52.5 | 7.3 | -23.4 |
| Foreign Direct Investment(USD bn) | 2.9 | 2.6 | 2.9 | 3.5 | 3.0 |
| International Reserves(USD bn) | 32.7 | 43.2 | 46.2 | 33.7 | 27.1 |
| International Reserves(months of imports) | 7.2 | 10.6 | 7.4 | 5.1 | 5.3 |
| External Debt(USD bn) | 62.5 | 73.6 | 91.5 | 97.0 | – |
| External Debt(% of GDP) | 17.8 | 19.7 | 22.0 | 21.1 | – |
Perspective Plan of Bangladesh (2010 – 2021): Making Vision 2021 a Reality
The year 2021 marks the 50th anniversary of independence of Bangladesh.In recognition of the long-term development challenges, the Government under the leadership of Prime Minister Sheikh Hasina adopted the Vision 2021. The Vision 2021 and the associated Perspective Plan 2010-2021 have set solid development targets for Bangladesh by the end of 2021. Those targets, if achieved, will transform the socio-economic environment of Bangladesh from a low income
economy to a middle income economy.
The Bangladesh economy will be managed within the framework of a market economy with appropriate government interventions to correct market distortions, to ensure equality of opportunity, and to ensure equity and social justice for all. Those development priorities include ensuring broad-based growth and reducing poverty, ensuring effective governance and sound institutions by creating a caring society; addressing globalization and regional cooperation; providing energy security for development and welfare; building a sound infrastructure and managing the urban challenge; mitigating the impacts of climate change; and promoting innovation in a knowledge-based society. These thematic approaches will shape and form the foundation on which specific strategies are developed over the period of two five-year plans (Sixth and Seventh Five Year Plans).
Source: Perspective Plan of Bangladesh (2010 – 2021), Planning Commission
Seventh Five Year Plan (2016-2020): Accelerating Growth, Empowering Citizens
The Government’s Vision 2021 defines several economic and social outcomes for Bangladesh to achieve by 2021. To convert this Vision into long-term development targets, a Perspective Plan 2010-2021 was prepared. The targets of Vision 2021 and the associated Perspective Plan 2010-2021 were to be achieved through the implementation of two five-year plans, the Sixth Five Year Plan (2011-15) and the Seventh Five Year Plan (2016-2020).
The 7th Plan seeks to raise the GDP growth rate progressively from 6.5% in FY15 to 8% by FY20. The average growth rate is projected at 7.4% over the Seventh Plan period. It therefore encapsulates a strategy for inclusive growth which empowers people by creating employment opportunities, fostering the scope for greater labor force participation, particularly of women, supporting skill development in response to market demand, enabling access to credit for small and medium enterprises, and many other ways for people to be more productive.
With about a quarter of the population of 160 million still living below the poverty line, faster growth is a necessary condition for attacking poverty. The 7th Plan seeks to reduce poverty rate to 18.6% and extreme poverty to around 8.9% by FY2020.
Along with growth, the 7th Plan will emphasize human development, social protection and social inclusion as essential elements of a comprehensive poverty reduction strategy. It is estimated that some 12.9 million additional jobs will be available during the five years of the 7th FYP, including some 2 million jobs abroad for migrant workers, during the same period.
Source: Seventh Five Year Plan (FY2016-2020): Planning Commission
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