MACRO-ECONOMIC OUTLOOK OF BANGLADESH
GDP growth of Bangladesh stood at 5.24 percent during FY2019-20. It’s a downgrade from the previous year’s growth of 8.15 percent. An increase has been seen in the remittance inflow which stands at 10.87 percent. A total of USD 18,205.01 million has entered the economy, mainly from the workers in Middle Eastern countries. The result was an expanding foreign reserve. In 2020, GDP per capita increased by USD 142 and reached USD 1,970. GNI also increased by USD 155, reaching the USD 2, 064 mark. There has been less growth in large, medium, and small scale industries as it decreased from 14.84 percent to 5.47 percent.
A similar downward trend has been seen in the construction sector too, which decreased to 9.06 percent from 10.25 percent. Overall, the industrial sector contribution increased slightly. It was 35 percent in the previous year but FY 2019-20 percentage stands at 35.36. In contrast, there was an overall decrease in the service sector. In FY 2018-19, its percentage in GDP was 51.35 but this year? 51.30. This slight change is due to the lockdown and closure of restaurants, transport, trade and business activities, etc.
Understandably, tax revenues also decreased by 1.73 percent.
The government earned TK 2,14,848 crore this year. Various stimulus financial packages have been provided by the government to strengthen the economy. 4.3 percent of the GDP or TK 1,20,053 crore has been allocated for this purpose. Export earnings also decreased by 16.93 percent which is USD 33,674.09 million. Import also decreased by 8.56 percent due to the contraction of domestic market activities.
Agriculture: The production target of food grain for FY 2019-20 was 45.04 lakh metric tonnes. The government imported about 5.03 lakh metric tonnes of grain. At the same time, 46.21 lakh metric tonnes of food was imported by the private sector of which wheat is the main product. The COVID-19 pandemic has created a shortage of food production all around the world. Hence the government has prioritized the well-being of farmers and laborers.
Ensuring nutrition and food supply is one of the primary targets to combat worldwide shortages of food products. In the FY 2019-20, TK 9,000 crore has been allocated for the agricultural sector whereas the amount for FY 2020-21 is TK 9,500 crore. Likewise, fish production is also projected to reach the target of 44.85 lakh metric tonnes. Vaccine production for livestock and poultry was 1.08 crore and 17.38 crore doses respectively in 2020.
Industry: Bangladesh Bureau of Statistics states that the industry sector contribution is increasing in Bangladesh. For the FY 2019-20, it is 35.36 percent of the whole GDP, an increase of 0.36 percent compared to the previous year. The government is taking measures to develop manufacturing, energy, agriculture, forestry, mineral extraction, tourism, and processing industries. Direct and increased emphasis is being enjoyed by the ICT sector.
All has been done under the framework of ‘National Industrial Policy – 2016’. The policy aims to uplift women and entrepreneurs into the current economic activities as well as build a sustainable, comprehensive, and inclusive industrial sector. Various government loans are stimulating this process. Besides, the building of EPZs and economic areas are expected to help the process greatly.
State-owned enterprise: In Bangladesh, sectors like power, transport, communication, service, and gas industry are largely controlled by state-owned enterprises. The estimates up to June 2020 puts the net profit from state enterprises at TK 7,519.3 crore. At the start of this year, 30 state-owned enterprises had a loan of TK 39,342.79 in the state-owned banks. Overall, the profit from these enterprises stands at 0.68 percent. It’s a gradual decrease compared to previous years.
Power and energy: Installed electric generation capacity in FY 2019-20 was 19,630 MW. The number reaches 22,787 MW if renewable energy is added. Currently, about 96 percent of Bangladeshis have access to electric energy. more than half (52.34 percent) of the power is generated by government facilities while 37.92 is produced by the private sector. Rest is imported. About 10.03 percent of electrical power is lost during transmission and distribution.
It’s a decrease from 15.73 percent in the previous year. There are 3.64 crore consumers and the distribution line stands at 5.60 lakh kilometers. Bangladesh aims to reach 24,000 MW capacity by 2021 which will increase to 40,000 MW by 2030 and 60,000 MW by 2041. The primary source of commercial energy is natural gas. As of 2020, Bangladesh has 27 gas fields which hold about 10.63 trillion gas. The government aims to diversify energy sources to relieve pressure on gas and fuel oil.
Communication: Communication and transport contribute to 11.01 percent of the GDP. An efficient road and transport network is a must to sustain accelerated growth and economic activities. Projects like Padma Bridge, Bus Rapid Transit, Elevated Expressway, Metro Rail, etc are to facilitate that. As of February 2020, Bangladesh has 22,096 km of roads. Several measures have been taken to develop the railway, river routes, watercraft movement, and river ports.
The port of Chittagong is responsible for about 92 percent of international trade. Its container handling capability has been increased by 12.38 percent. The government especially focuses on expanding telecommunication networks. There are about 16.06 mobile phones in the country. The IT-based sector has great potential to develop services and lifestyles in Bangladesh. Due to the pandemic, the e-commerce sector has experienced an unexpected boom.
Human Resource Development: The development of human resources is one of the priorities for the government of Bangladesh. in FY 2019-20, 23.67 percent of the budget has been allotted to social welfare, education, women, children, and family welfare, youth development, health, and technology, etc. ‘National Education Policy 2010’ has been taken to develop skilled and competent human resources. The government has the policy to recruit at least 60 percent of the teachers as female in the government primary school, currently, the percentage stands at 64.52 percent.
The country has achieved millennium development goals well before the UN timeline regarding health and nutrition. Two ‘UN South-South Award’ is the recognition of that achievement. Sustainable development Goals (SDG) is also the government’s primary focus. ‘Domestic Violence (Prevention and Protection) Act-2010’, ‘National Women Development Policy-2011’, ‘National Child Policy-2011’ and ‘Child Marriage Prohibition Rules-2018’ has been instrumental in Bangladesh’s forward progress in human development. The ‘Human Development Report-2019’ puts Bangladesh in the 135th position.
Poverty: The Household income and Expenditure report of 2016 puts the poverty rate at 24.3 percent. This is a decrease from 2005’s mark of 40 percent. The rate is projected to drop at 18.6 percent by 2020. Social security net in the form of ‘National Social Security Strategy (NSSS)’ allocates Tk. 74,367 crore for FY 2019-20. Projects like ‘Aktee Bari Aktee Khamar’ (One House One Farm)’, ‘Grihayan’, ‘Ashrayan’ etc have been a great success against poverty. Besides, governments provide allowances for widows, old aged people, and pregnant women.
Private Sector Development: The government is trying to bring foreign investment in the private sector to boost the economy and create employment through ‘Public-Private Partnership (PPP)’. In the first months of FY 2019-20 government formulated proposals worth TK 92,759.00 crore intended for more than seven hundred private projects. e-commerce and e-governance are heavily focused on the government.
Climate change and environment: For a country like Bangladesh, sustaining the environment is among top priorities. Efforts to integrate environmental conservation and development policies are being undertaken. ‘Vision 2021’ projects environment-friendly development as a primary target. ‘Bangladesh Climate Change Strategy and Action Plan, 2009 (BCCSAP 2009)’ is another scheme to tackle climate change.
The government formed the ‘Bangladesh Climate Change Trust Fund (BCCTF)’ for this purpose. Besides funds like ‘Climate Change Trust Fund Act, 2010’, ‘Climate Change Trust Fund Guidelines’ and ‘Bangladesh Climate Change Resilience Fund (BCCRF)’ is also working to preserve and maintain the environment.
THE ECONOMY OF THE WORLD IN 2020
Except for China, which maintained a meager 1.9 percent growth, all other developed world countries went into a recession in 2020. Export-oriented economies of Latin America and the Middle East were hit hard, as well as those who rely much on tourism. large Asian economies like India, Japan, or South Korea were no exception. The developing world experienced less contraction though (2.5 percent). However, recovery is being faster than expected around the world.
The World Bank speculates that at least 170 countries are experiencing negative growth. But stimulus packages, credit inflow, and new fiscal policies will soon bring the economy back on track. IMF projects the world economy will experience a growth of 5.4 percent in 2021 thanks to the vaccines. Oil, one of the driving forces behind economies, will also see a surge in price which is expected to hit 48 dollars a barrel in the coming year.