The World Bank has projected Bangladesh’s economic growth to be 7.2 percent this fiscal year that is 1 percentage points less than the government’s projection of 8.2 percent.
The projection was made in its latest Bangladesh update unveiled at its Dhaka office on Thursday.World Bank Country Director Mercy MiyangTembon said Bangladesh’s economy is projected to maintain strong growth backed by sound macroeconomic fundamentals and progress in structural reforms.
“To achieve its growth vision, Bangladesh will need a high-productivity economy. Human capital development that is responsive to labor market demand for higher-level skills and to rapid technological advancements will be crucial,” said Tembon, who is also World Bank Country Director for Bhutan.
Bangladesh economy sustains strong growth in FY19 led by rising exports and record remittances, according to the new World Bank report, “Bangladesh Development Update October 2019: Tertiary Education and Job Skills,” launched today.
The report mentioned that Bangladesh needs to create quality jobs for about two million young people entering the labor force every year.
To harness the benefits of this growing labor supply, investments in human capital are required and the country needs to invest significantly in teaching, learning and ICT facilities, among other areas, to create a competitive workforce, it said.
Higher labor productivity will be essential to diversify the economy beyond garment exports and remittances. Growing sectors—such as export-oriented manufacturing, light engineering, shipbuilding, agribusiness, information and communication technology (ICT), and pharmaceuticals—will require skilled professionals in managerial, technical, and leadership positions.Tertiary graduates struggle to find jobs, indicating a major skills gap, said the report adding that only 19 percent of college graduates are employed full-time or part-time.
At the tertiary level, more than a third of graduates remain unemployed one or two years after graduation, while unemployment rates of female graduates are even higher.
“Labor market surveys repeatedly show that employers struggle to fill high-skill positions such as technicians and managers,” said Bernard Haven, World Bank Senior Economist, and co-author of the report.
“To bridge the demand and supply gap, investments in skills training, equitable access for female and poor students, public funding mechanisms to develop market-relevant skills and an effective regulatory and accountability framework are needed.”
According to the report, remittances grew by 9.8 percent, reaching a record $16.4 billion in FY19 and the contribution of net export growth was positive, supported by a diversion of garment export orders from China and a decline in imports, according to the global lending agency.
Agricultural and pharmaceutical exports led non-RMG export growth. However, leather and leather product exports declined by 6 percent, it said.
Net foreign direct investment (FDI) increased by 42.9 percent from a low baseline with investments in the power, food, and textile sectors, said the report.
Private consumption grew by 5.4 percent and private sector credit growth was weak and bank liquidity remains constrained, said the WB report adding that non-performing loans continued to rise in the banking sector.
The report warned about an uncertain global outlook and domestic risks in the financial sector.
It said exchange rate appreciation is also a challenge for Bangladesh’s trade competitiveness.
Reforms in the financial sector, including revenue mobilization and doing business, will be essential for progress.
The report also urges closing the infrastructure gap and timely implementation of the Annual Development Plan.
(Input from UNB)