Economy
‘Bangladesh’s GDP could fall below 4pc by 2035’
The World Bank (WB), in a study, has found three obstacles to Bangladesh’s economic reform. Without massive reforms, Bangladesh’s gross domestic product (GDP) could fall below 4% by 2035, it said.
The three obstacles are declining trade competitiveness, a weak and vulnerable financial sector, and unbalanced and inadequate urbanization. If these three obstacles can be addressed, the development will get a boost and growth will be more sustainable, the study noted.
According to the WB report, Bangladesh has been one of the top 10 fastest-growing countries in the world for several decades. But there is no reason to be complacent. The economic boom is never a permanent trend, the report said.
Growth in fast-developing countries is always at high risk. Few countries have sustained high growth for long periods. Only one-third of the countries in the top 10 continued to experience high growth over the next decade, the report said.
WB has made some recommendations to sustain economic growth. For example, to maintain growth in exports, products should be diversified.
Apart from this, Bangladesh’s tariff rate is higher than other countries, due to which the trade capacity is decreasing.
Regarding the banking sector, WB said, it will play an important role in future economic development. Although the financial sector has improved in the last four decades, it is still not sufficient, the report said.
On the other hand, urbanization is essential for Bangladesh’s next development stage. Attention should be paid to balanced urbanization, the report said.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh and a former IMF official said, “I fully agree with what the WB has said. Our first-generation reform is done.
“The second and third-generation reforms were to take place. But we have not yet initiated the second-generation reforms.”
Bangladesh is gradually falling behind other countries, including Vietnam.
“With the current policies, we cannot take per capita income to $12,000. We have no alternative to human resource development,” he added.
The Bangladesh Bureau of Statistics (BBS) has projected that the country’s economy will grow at a rate of 5.82% in the current fiscal year (FY24), ending on June 30. This provisional estimate shows a slight increase from last fiscal year’s 5.78% growth. The figure aligns closely with forecasts by the International Monetary Fund (5.7%) and the World Bank (5.6%).
In terms of per capita income, there has been a modest rise to $2,784 in the current fiscal year from $2,749 in the previous year. This estimate is based on data from the first seven months of FY24.
Initially, the government had projected a growth rate of 7.5% for the current fiscal year in the budget, but this was later revised downward to 7%.
Bangladesh’s Gross Domestic Product (GDP) at current prices has increased to $459 billion, up from $452 billion in the previous fiscal year.
Sector-wise analysis shows mixed trends. The agriculture sector is estimated to grow by 3.21% this fiscal year, down from 3.37% last year, marking a 0.16% decrease. The industry sector is projected to grow by 6.66%, down from 8.37%, reflecting a 1.71% decrease. Conversely, the services sector is expected to grow by 5.80% this fiscal year, up from 5.37% in the previous year, indicating a 0.43% increase.
The investment-to-GDP ratio remains steady at 30.98%, according to BBS data. In the agriculture sector, the estimated growth for this fiscal year is 3.21%, down from 3.37% the previous year, marking a 0.16% decrease.
Additionally, the domestic savings and national savings rates stand at 27.61% and 31.86%, respectively, for the current fiscal year. Compared to the previous fiscal year, investment increased by 0.03%, domestic savings by 1.85%, and national savings by 1.91%.
Private sector investment growth is estimated at 23.5% this fiscal year, compared to 24.18% in the previous year.
The BBS also estimated the consumption rate at 74.24% in FY24, up from 72.39% in the previous fiscal year.
Bangladesh to Host Major Roadshow in the USA to Boost Dollar Deposits
Next Friday, on May 24, Bangladesh will host a significant roadshow in the USA, featuring 30 managing directors from various domestic banks. This event aims to attract dollar deposits in response to recent fluctuations in foreign exchange rates.
A total of 45 officials, including the managing directors of these 30 banks, will travel to the USA for a special promotional program designed to increase US dollar deposits in banks via offshore accounts. This marks the first time such a large gathering of Bangladeshi bank MDs will take place abroad.
Sources indicate that commercial banks are launching special campaigns to boost the flow of dollar deposits. The program will encourage expatriates to send dollars through official banking channels. To this end, a specific event focused on Offshore Banking Fixed Deposits has been organized for expatriates at a hotel in New York.
The Bangladesh Ambassador to the United States, Mohammad Imran, will serve as the chief guest at the event. Other special guests include Muhammad Abdul Muhith, Permanent Representative of Bangladesh to the United Nations in New York; Deputy Governor Kazi Sayedur Rahman; and Md Najmul Huda, Bangladesh Consulate General in New York.
This gathering highlights the increasing interest among Bangladeshi banks in diversifying their foreign currency reserves by exploring opportunities in offshore banking.
As part of this initiative, a promotional event has been organized to encourage Bangladeshis residing in the United States to deposit dollars through offshore banking.
During the eleventh month of the current fiscal year, the country’s foreign currency reserves have fallen below $19 billion for the first time. After paying off some import bills, the reserves have now stood at $18.26 billion on Sunday.
According to the International Monetary Fund (IMF), as of May 8, the total foreign currency reserves of the country were $19.82 billion.
Mohammad Mezbauul Haque, the spokesperson of Bangladesh Bank, informed that through the Asian Clearing Union (ACU), the central bank has paid off import bills totaling $1.63 billion over the past two months.
However, Bangladesh Bank maintains that after paying off the import bills, the foreign currency reserves now stand at $23.71 billion.
According to the Central Bank’s accounts, the reserves were $25.27 billion on May 8.
You must be logged in to post a comment Login