Saturday, 16 October, 2021

Bangladesh: Potentiality of Economic Growth

Bangladesh: Potentiality 
of Economic Growth

Bangladesh has the potential to become the 28th largest economy within 2030 up from 31st in 2016, according to PricewaterhouseCoopers (PwC). The PwC analysis said Bangladesh has the potentialities to be among the fastest growing economies in coming years. The country will benefit from its youthful and fast growing working-age population, meeting domestic demand and boosting output. Experts, economists and policymakers have said the PwC analysis has depicted the potentiality of Bangladesh’s economic growth.


A PwC report titled “The long view: how will the global economic order change by 2050?” predicted that Bangladesh could rise further in the ranking by achieving an average annual growth of around five per cent over the next 34 years. But this lift will depend largely on how the country moves to create jobs for the growing young people, said the report.


PricewaterhouseCoopers is a multinational professional services network based United Kingdom. It is the second largest professional services firm in the world, and is one of the Big Four auditors, along with Deloitte, EY and KPMG. Vault Accounting 50 has ranked PwC as the most prestigious accounting firm in the world for seven consecutive years, as well as the top firm to work for in North America for three consecutive years.


The PwC has also warned about corruption, calling for ensuring good governance to help Bangladesh rank 28th among the world’s most powerful economies by 2030. However, experts and economists have criticised the PwC study on total growth rate in Bangladesh comparing to the growth per capita since the report said the country is posting an average growth of five per cent annually. The country’s projected gross domestic product (GDP) by purchasing power parity, as predicted in the report, will be at $1.324 trillion and is likely to jump to $3.064 trillion by 2050, ahead of Malaysia. The global economic protection trend by developed countries may hamper Bangladesh’s export earnings, they feared.


 The PwC report ranked 32 countries by their projected global gross domestic product by purchasing power parity (PPP). The PPP estimated of GDP adjust for price level differences across countries, providing a better measure of the volume of goods and services produced by an economy as compared to GDP at current market exchange rates, which is a measure of value. Bangladesh was ranked 31st among the world’s 32 largest economies in 2016, that together account for around 85 per cent of global GDP. Emerging market economies will drive global growth and eventually increase their share of world GDP, the report said.


“We project that the world economy will double in size by 2042, growing at an annual average rate of around 2.6% between 2016 and 2050,” said the PwC report. It also predicted that the E7 economies – Brazil, China, India, Indonesia, Mexico, Russia and Turkey – would occupy almost 50 per cent of the world GDP by 2050, while the G7’s share would decline to only just over 20 per cent.


 The economy of Bangladesh grew at a higher rate than the government’s estimation to hit the record high at 7.11 per cent in last financial year thanks to a robust growth in industry and service sectors. Earlier, Bangladesh Bureau of Statistics (BBS) had reported a 7.05 per cent provisional GDP growth figure for FY 2015-16 after reviewing nine months’ economic activity for assessing the growth. The growth rate of economy was 6.55 per cent in 2014-15 fiscal. According to the BSS, 7.11 per cent growth was officially the highest growth rate in the country since the independence.


 Meanwhile, per capita income was finally calculated at $1,465 although it had been a dollar higher in the provisional estimate. The industry sector grew the most by 11.09 per cent last year from 9.67 per cent a year earlier and service sector’s growth soared to 6.25 per cent, up from 5.80 per cent in the previous fiscal year. The agriculture sector’s subdued to 2.79 per cent from 3.33 per cent a year ago, said the BBS report. Electricity, gas and water supply – the industrial sub-sector – grew the most by 13.33 per cent in FY 16 which was only 6.22 per cent a year earlier. The overall size of the GDP at the constant market price for the FY16 stood at Tk 173,267 crore and GNI soared to Tk 183,267 crore.


  Bangladesh will achieve eight per cent economic growth in the coming two years, Finance Minister Abdul Maal Abdul Muhith has hoped. He made the comment in a discussion arranged by the Bangabandhu Foundation’s Bangladesh Bank chapter on January 16. “I’m very hopeful about Bangladesh achieving 8 per cent growth in the coming two years. I believe we have all the reasons to feel optimistic because of the way we have risen,” said Muhith. He also said Bangladesh must guard against ‘middle income downturn’.


 The World Bank has projected 6.8 per cent GDP growth for Bangladesh, despite internal security challenges and sluggish global demand. The global lender posted the growth projections for the current financial year in its half-yearly report, Global Economic Prospects, on January 18.   After being restricted to six per cent growth for about a decade, Bangladesh’s economy posted a 7.11 per cent GDP growth in the 2015-16 fiscal. The government set a 7.2 per cent growth target for 2016-17 fiscal.


 Finance Minister Abul Maal Abdul Muhith was confident that the growth would not slip below 7 per cent. The World Bank did not fully agree with the government but has since somewhat moved away from its earlier scepticism.  WB’s Global Economic Prospects said Bangladesh would not achieve 6.3 per cent growth in 2016-17. The forecast in January last year was six percentage points higher. The World Bank in the report said private expenditure and investment were both suffering due to sluggish foreign currency flow. It warned that weakening remittance and exports may lower economic growth to 6.5 per cent in the 2017-18 fiscal.


  This is good news that the country’s economy is moving steadily towards a healthy growth coming out of a growth trap of six per cent maintained for a long period of time. The government and also the people of the country deserve to be complimented for this growth progress. An increase in the gross domestic product (GDP) and the per capita income also soared along with it, said officials of the BBS, adding that the estimated GDP growth to be 7.05 per cent by the end of this fiscal year in June. Bangladesh’s per capita income was $1,080 in 2014, higher than the World Bank set threshold of $1,045.


The government has recently approved 24 more economic zones, including two separate special zones for Japan and India. A total of 24,017 acres of land, mostly owned by the government, have been allotted to the new 24 economic zones. Prime Minister Sheikh Hasina said recently that her government would gradually set up 100 economic zones to attract more foreign investment. Surely, these steps are encouraging developments towards achieving eight percent economic growth target.


Bangladesh is expected to come out of the least developed country (LDC) bracket and achieve the status of a mid-income country within the next seven years for making significant progress in some key areas. It is about to reach the graduation threshold for its position in the Economic Vulnerability Index (EVI) as well as in the context of the present favourable social and human development situation in country, according to an analysis of the External Economic Policy (EEP).


    Prime Minister Sheikh Hasina declared her government‘s intention to make Bangladesh a middle-income country by 2021 and subsequently to set up in the next five years Vision 2041 for a developed country.   She also promised to increase per capita income to $1500 from existing $1044 and GDP rate to 10 per cent from existing 6.2 per cent in the next five years, reducing the rate of poverty at 13 per cent from the existing 26 per cent by 2021.


  All these are encouraging development towards achieving the status of middle-income countries by 2021. But the rancorous politics is the main barrier, which has already destroyed the economy which was throbbing with life only two years back. We may have to look to other countries around us to find an increasing trend of interplay between politics and economics. The economics of a country can never be right if its politics goes wrong. Such is the case with Bangladesh.  A developing nation like us cannot afford to aggravate it economy because of petty political disagreements. So, for the greater interest of the nation, its economy should be de-linked from politics to achieve eight per cent growth target.


The writer is a columnist.