Overview of Bangladesh Economy

With a continued average economic growth of over 6% in the last ten years (2004-2014), Bangladesh now proudly stands as an emerging trade and investment destination in South Asia. The steady growth in export business, hard-working labour force and committed entrepreneurs supported by the pro-business, pro-investment policies of the Government are leading Bangladesh towards the line of global business competency. The country’s unequivocal position for peace and harmony, regional stability, cooperation, economic development through international and regional trade with its development and trade partners and an increasing flow of remittance by expatriate Bangladeshis living across the world have helped the country achieve and retain the impressive economic status. It is expected that GDP will grow around 7% in the FY 2015-16. A strong domestic demand, high export growth and continued expansion of infrastructural facilities attributed to the accomplishment of accelerated growth amidst the fragile pace of global economic recovery.

International Monetary Fund (IMF) in its World Economic Outlook, 2015 has ranked Bangladesh as the 56th largest economy in the world in terms of nominal GDP in 2014. World Bank’s ranking of Bangladesh in the same category is 58th (2013), the United Nations’ (2013) - 57th and the World Fact Book of the CIA has placed Bangladesh in 56th position (2014). The country registered a gross domestic product of US$ 186.6 billion in 2014, US$116.03 billion in 2013 and US$111.91 billion in 2012, while GDP in terms of purchasing power parity was US$ 535.6 billion in 2013. Although more than half of the GDP is generated through the service sector, almost half of the total population are employed in agriculture. Garment exports, the backbone of Bangladesh industrial sector and 80% of total exports, surpassed US$18 billion in 2014. Remittances sent by Bangladeshi expatriates totalled US$15.30 billion in 2014-15 financial year, also forms a very important pillar of the country’s economy.

Bangladesh experienced a satisfactory FDI in the last five years. World Investment Report 2014 ranked Bangladesh 16th among 74 FDI-recipient countries with a record US$ 1.59billion FDI inflow in 2013. This is the third time Bangladesh’s FDI has exceeded the billion dollar mark in a single year. Standard & Poors latest credit rating for Bangladesh stands at BB-. Moody’s rating for Bangladesh sovereign debt is Ba3. The transfer and convertibility (T&C) assessment remains ‘BB-‘. The Government of Bangladesh has planned a long-term perspective plan, with a target to make Bangladesh a middle-income country by 2021, by raising the real per capita income to US$ 2,000 which now stands at US $ 1,314 (in real terms).

In Bangladesh, a strong middle class is gradually forming which according to some estimates is close to 18 % of the population. Due to emerging middle class and in general better income level of common people, domestic demand is growing and that becomes an important driver of economic activity. As major economies of the world are gradually losing their competitiveness, manufacturing has been gradually starting to take root in the country. Bangladesh has now emerged as an important manufacturing base for textile products, pharmaceuticals, finished leathers, light and medium industries, IT and shipbuilding. While world trade was severely disrupted by the global recession in recent past with exports of most countries declining sharply, the export of Bangladesh shows satisfactory growth. Bangladesh has emerged as the second largest exporter in the world apparel market and is also doing exceedingly well in the exports of finished leathers and leather goods, frozen foods, jute and jute goods, pharmaceutical products, light engineering products and small ocean going vessels. In 2014-15, Bangladesh posted US$ 31.2 billion export earnings, while at the corresponding periods the country registered import bills of US$ 38.5 billion. Most of the items in the import list are petroleum products, capital goods and industrial raw materials.

Bangladesh has also attained a satisfactory foreign currency reserves in recent months. Until April 2015, reserves stood at US$ 23.35 billion. Apart from remittances by expatriate Bangladeshis, the increase in export earnings and decrease in import cost played their role in boosting the reserves.