Back On Rails

The World Bank has said that the economy of Bangladesh is showing signs of considerable recovery due to a surge in exports, increase in inflows of remittances and the ongoing vaccination program after Covid-19 created an economic turmoil. The World Bank has also projected that during FY 21, economic growth in BD will rebound based on recovery in manufacturing as export demand increases, there is a rise in construction activities based on public investment and there is vibrant service sector growth. The ADB has forecast that GDP of Bangladesh will increase to 6.8% in 2021 and 7.2% in 2022, while the growth of GDP per capita, with an increase of 9% for 2021-22, is now more than India and Pakistan.

Despite Covid-19, the Bangladesh economy shows recovery persistently and future projections are also promising as Goldman Sachs forecast that Bangladesh might dominate the future world economy. The World Economic League also gave a positive outlook of Bangladesh’s economy and said it could be among the world’s top economies by 2035, considering its demographic dividend and rising per capita income.

During 2020, the country received more than $21 billion in remittances while its foreign reserves grew to $45 billion in 2021. The export of readymade garments to the United States, which is also the country’s major export destination, increased by 15.38 percent to $ 2.58 billion during the first five months of 2021 as compared to the same period in the previous year. Total exports in the first eleven months of FY 21 increased by 13.64% as compared to the same period in FY 20. Besides readymade garments and jute exports also grew significantly in addition to food and fish products. The severe pandemic wave in India has also shifted some of the business towards Bangladesh, which has benefited the domestic garments sector. Quite recently, the Chinese government has approved a duty-free facility for 97% goods from Bangladesh, which will be a massive benefit for the country.

The effective policies of the country are helpful in taking the economy on a stable path. The plan to develop hundred economic zones will generate job opportunities and minimize the unemployment rate. Bangladesh has also invited other countries like Qatar to invest in SEZs. Smooth policies for foreign investors are attracting much-needed FDI in the country. Besides, international development assistance such as $ 300 million from the World Bank to promote the rural economy is vital to support the rural entrepreneurs and producer groups through developing market linkages, including e-commerce platforms. The economic slowdown has not affected the revenue collection of the government which has posted a growth of 17% during FY 21. Quite recently, Microsoft signed up to pay value added taxes in Bangladesh before which Google and Facebook also did the same.

The consistent good performance of the Bangladesh economy has lessons for neighbouring countries. The economic growth of Bangladesh is also an opportunity for neighbouring countries to create market linkages through which the much-needed trade relations can be promoted. This can be observed from bilateral relations of Bangladesh and India as Bangladesh has become the fifth largest export destination for India. Pakistan can also explore the Bangladesh market to increase its exports. However, certain issues, including visa procedure among the two countries, non-tariff barriers and no direct shipping lines are affecting trade flow. Mutual collaboration, particularly in the textile sector, can help develop value chains, which will be beneficial for both countries in the long run.

Feasible investment regulations by the Bangladesh government have attracted attention of many countries which are showing keen interest for investment. Pakistan also needs to simplify investment regulations in order to attract FDI and multinational companies. The garment industry, which is the backbone of the Bangladesh economy, is also thriving. Multinational companies such as Walt Disney are also planning to reinstate their production in Bangladesh. All these measures and developments are helping Bangladesh to recover from effects of the Corona pandemic and the economy is getting back on track.