By Shama Shafiq
The driving forces behind shifts in global economic power lie within emerging countries. An upswing in the economic activities of emerging countries is fast-tracking this transformation in the global dynamic. Projections by the HSBC Global Research place Bangladesh as the 26th largest economy in 2030 – a massive headway compared to the 42nd position that Bangladesh currently holds. The report looks at 75 economies in developing, emerging and frontier markets in order to make long-term projections of their growth potential and shifts in their global rankings. The rankings are based on six main categories of economic indicators: catch-up potential, population (size and shape), human capital (education and healthcare), politics, openness, and technology.
Researchers suggest that China will be the world’s largest economy in 2030, overtaking the US, while India – currently the seventh biggest – will be third, pushing Germany and Japan down a position. China will continue to be the single biggest contributor to global growth but Asian economies such as Bangladesh, India, Philippines, Pakistan, and Vietnam will be among the world’s six fastest-growing economies. According to the HSBC report, emerging countries account for about half of the global growth over the past decade and roughly 70 percent of future world growth will be from emerging economies. As an emerging economy, Bangladesh has various facets enabling this growth. HSBC’s long-term growth model projections showed that the real GDP growth of Bangladesh would be 7.1 percent per year up to 2030, the highest among the 75 countries included in the report. This indicates the potential for Bangladesh partaking as a major economic player in Eurasia. The major components that have made this growth possible are Bangladesh’s presence in global trade, recent political stability, positive economic policymaking, and improving development prospects.
Bangladesh went from being a least economically developed country in the 1970s to one of the most promising economies in just a few decades. This substantial progress was due to the combined effort of the public and private sector. The readymade garments industry in the 1980s transformed Bangladesh’s economy in terms of international trade. Cheap labor and low cost of production were lucrative to investors and with time the country became specialized in the clothing industry. This gave Bangladesh a widespread international recognition for its clothing products and consequently, Bangladesh became the focal point for the clothing industry bringing in billions of dollars to the local economy and increasing the national reserve. Although Bangladesh’s specialization in RMG has been and still continues to be profitable for the economy, it is also important to cast a safety net. It is high time for Bangladesh to focus on trade diversification, and put more emphasis on the burgeoning tech industries. Trade diversification will bring in a large amount of capital into the economy which will enhance the living standards and opportunities for the local people. And with the fourth industrial revolution on the horizon, it is imperative for the economy to invest in technology and automation of the garments manufacturing process in order to sustain the competitive edge in the RMG industry. Technological progress is related to the extent by which Bangladesh lags behind the countries which are leading in the tech-scene e.g. USA. However, through investing in the transfer of technology Bangladesh has the potential to ‘catch-up’.
Bangladesh and other emerging economies have strong potential for growth However, this projected growth will only materialize in the presence of good governance and growth-friendly policies. There are, of course, many other uncertainties surrounding these long-term growth projections. Therefore, it is vital to have contingency plans and increase responsiveness to immediate economic and political shocks. The government needs to address issues such as climate change, corruption, and terrorism in order to facilitate a smooth progress. Sustaining the current rate of advancement, political stability, infrastructural developments, and a growing educated workforce are all instrumental for Bangladesh to reach new heights in the global economy.
