The performance of Bangladesh economy in 2019 with reference to global, macro and micro levels presents a mixed picture. Globally, the country did not suffer any major setback during the year, but some headwind stemmed from slowed-down export and import due to shrinking global economic growth.
The country recoded an estimated 8.15 per cent GDP growth in FY19 - considered by Asian Development Bank (ADB) to be the fastest-growing economy in the Asia-Pacific region, according to an editorial of the quarterly news bulletin of International Chamber of Commerce Bangladesh's (ICCB) released on Wednesday.
Such growth was possible due to strides by finding new markets for its exports and attracting large number of foreign investors as well as investing in a variety of mega modernisation projects.
The FDI also increased to 5.36 per cent year-on-year during July-October period of FY20, the report noted.
According to World Bank Chief Economist for the South Asia region, Hans Timmer, the high frequency data shows that “Bangladesh is doing better than the rest of the region, especially than India, Sri Lanka and Pakistan. We see that in industrial production; we see that in exports.”
Bangladesh’s exports earning during 2019 (calendar year) was $39.33 billion which was $39.25 billion in the year before. Import payment during 2019 was $59.09 billion against 60.49 billion in 2018.
Remittance earnings, which grew by 9.8 per cent, stood at $20 billion at the end of 2019 - boosted by depreciation of Taka and cash incentives given at the rate of 2.0 per cent of the remitted amount.
According to World Economic Forum (WEF) Bangladesh has been classed by the United Nations as one of the world’s least developed countries (LDCs) since 1975, but its current trajectory means it is likely to shed that description by 2024.
Graduating from LDC status is a sign that a country’s per capita gross national income, human assets, and resilience to economic and environmental shocks are robust enough to enable sustainable development, the ICCB bulletin added.
Bangladesh was ranked 105th in WEF Global Competitiveness Report 2019. The success of the IT industry is central to the digital transformation and ongoing economic growth of Bangladesh. The country exports nearly $1 billion of technology products every year – which is expected to increase to $5 billion by 2021. The country also has 600,000 IT freelancers, the report unveiled citing the WEF.
However, the ICCB expressed its concern over government's high borrowing from the banks.
As several mega infrastructure projects are underway, including the much-talked Padma multi-purpose bridge, a mass rapid transit system, an LNG terminal and several power plants and deep sea ports, the government largely depends on bank borrowing to finance its development programmes, due to limited resource mobilisation. The spike in government borrowings from banks has worsened the flow of credit to the private sector, it observed.
The growth of flow of loans to the private sector slowed to 11.32 per cent in 2018-19 against a target of 16.5. Presently, banks are facing a liquidity crunch. This is mostly due to banks holding large amounts of non-performing loans (NPLs).
According to the editorial, NPLs accounted for 11.69 per cent of total outstanding loans last June and many of these are due to willful defaulters.
Bangladesh’s economy will make one of the biggest jumps between 2020 and 2034 on the back of demographic dividend and rising per capita income, according to a recent report of the World Economic League Table (WELT) 2020, London-based Centre for Economics and Business Research (CEBR).
The country’s economy will outshine the economy of countries like Malaysia, Hong Kong, and Singapore with its presence as the 30th largest economy in the world by 2024, the ICCB said quoting the WELT report.
However, according to experts, two major aspects will govern the track of the economy of Bangladesh in the next decade: one is the graduation from a Least Developed Country (LDC) by 2024 and another is achieving Sustainable Development Goals (SDGs).
LDC graduation will bring a lot of new challenges, especially concerning losing trade preferences in major export destination countries. There are stringent and tough development goals that need to be achieved by 2030.