The economy of Bangladesh has fared quite well despite the impact of the Covid-19 pandemic. Before the onset of the Coronavirus, the economy was growing rapidly. In FY20 the growth became slower. However, the economy recovered fast the following year and in FY 21 GDP growth was 6.9 per cent, which is very high compared to other comparable developing economies. Today, Bangladesh is one of the fastest growing economies in the world. For all this, our farmers as well as industrial output have played a key role despite all odds.
The observation was made in an editorial of the current News Bulletin (Jan-Mar’ 2022) of International Chamber of Commerce-Bangladesh (ICCB) released today (Wednesday), according to a statement.
Bangladesh’s journey of 50 years since its independence in 1971 has been tremendous and to many it is a ‘land of impossible attainment’. The dominant narrative of Bangladesh has been of an economic miracle. Countries impressive score card is built on her success in terms of attaining a consistency, high pace of economic growth and an impressive performance with regard to various development indicators, including those relating to the Millennium Development Goals (MDGs).
The success in economic growth has led to Bangladesh’s dual graduation-graduation from a low-income country to a Lower middle-income country and eligibility for graduation from the group of Least Developed Countries (LDC) to a Developing Country. UN General Assembly adopted the resolution on Graduation of Bangladesh to Middle Income Country in 2026. This is a landmark achievement in Bangladesh’s development journey.
Graduation from the LDC group essentially means acquiring a seal of global approval for development achievements, which will brighten Bangladesh's image in the world court. Graduating to the developing countries group is the fruit of Bangladesh's judicious macro-economic management and planned investment for infrastructural and human resource development. However, investment for mega projects government must take adequate care for additional expenses and timely implementation; our experience, however, seems otherwise; including the most prestigious ‘Padma Bridge’!
Various research institutions and experienced economists citing post-graduation challenges, apprehend serious hurdles on its elevation, if Bangladesh fails to devise smooth transition strategies for confronting the challenges posed by this transition.
As graduation will affect certain preferential treatment and domestic infant industries, Bangladesh has to handle this prudently to make the transition sustainable. The most common economic challenges that every LDC graduate faces, is the loss of LDC-specific international support measures. The decline of existing privileges and preferences- may adversely hit the exports of Bangladesh, since the country relies heavily on the RMG sector, which has been bringing in more than 80 per cent of the country's export earnings for the last several decades.
To avoid these consequences, the country should diversify its export basket by promoting the export of new products such as pharmaceuticals, plastic products, leather goods, handicrafts, agro-products, fish and frozen foods etc. Besides, the government should analyse the markets in different regions, such as Latin America, the Middle East, South and Far East Asian Region and formulate strategies for penetrating those markets as part of diversifying export destinations.
Bangladesh should also join different regional trade blocs and signing of FTA with potential individual countries will also help in reducing the probable negative impact of graduation on the balance of trade.
In order to remain competitive and keep the economic growth steady after 2026, Bangladesh should focus on knowledge-based economy, mobilize both foreign and local resources, ensure congenial business environment including ease of doing business, shift towards manufacturing high-value goods, seriously promote FDI and export-oriented industries, with the same incentive as has been provided to RMG. Increase regional and global connectivity on a priority basis. The country must make plans to turn the challenges into opportunities in the coming days.