Page 111 - ICE BUSINESS TIMES March 2020

government with the fiscal headroom national income, human assets, and
to operate a budget deficit of 4.8 resilience to economic and
percent in 2019. environmental shocks are robust
The annual rate of GDP growth is enough to enable sustainable
forecast to slow to an average of 7.3 development.
percent between 2020 and 2025. Over The garment trade that began in
the subsequent nine years, the CEBR Bangladesh in the 1970s is now a $30
forecasts that the economy will billion industry. But the economy is
remain at this impressive rate, which diversifying. The services sector –
will see Bangladesh climb from 40th including microfinance and computing
place in the WELT to 25th place by – makes up 53% of the country’s GDP.
2034. The success of the IT industry is
central to the digital transformation
This distinction is not without basis. Haters Say What? and ongoing economic growth of
Bangladesh has been growing at over There are a few challenges for Bangladesh. It exports nearly $1
6% consistently for nearly a decade, Bangladesh's economy in 2020. These billion of technology products every
helping the country’s economy more challenges are not new and have year – a figure that the government
than double in size from USD 108bn in accumulated over the years. One big expects to increase to $5 billion by
2009 to more than USD 250bn in concern is how the economy would 2021. The country also has 600,000 IT
2018. This has been aided by steady handle the issues concerning export, freelancers.
growth of the readymade garment remittances, private sector investment, Bangladesh has seen wide
sector as well as a dramatic expansion employment generation and revenue improvements in health, education,
in power generation under Prime generation. infant mortality and life expectancy,
Minister Sheikh Hasina. Her Awami We are seeing a slowdown of export according to Daniel Gay of the United
League (AL) government has growth, specifically a negative growth Nations Department of Economic and
embarked on a massive infrastructure in recent months. The remittance front Social Affairs. This has driven growth
programme that has seen the number has remained strong but how long or and reduced economic vulnerability.
of power plants increase from 27 to to what extent this will continue, “It’s really a success story,” he says.

121 over the last decade, trebling the And Exactly How Rich remains a question. In the Gulf region,
country’s total capacity to 17,340 MW a serious crisis is going on which is Let’s Wrap This Up!
and nearly doubling electricity access Will We be in the better known to us as the recent The Prime Minister, Sheikh Hasina in
for its citizens, a substantial increase escalation of tension between US and her article for the Indian Economic
from 47% to 93% of the population. Future? Iran. Dream Big, Build Big Summit mentioned, “Many see
Japanese, Indian, Chinese companies Bangladesh’s economy will make one base data for 2019 is taken from the Another area of concern is revenue The benefits of the mega projects will Bangladesh as a 'market’ of over 30
have all been able to secure a slice of of the biggest jumps between 2020 International Monetary Fund’s World generation. The tax-GDP ratio is be realized if they are completed on million middle- and affluent-class
this growing pie, highlighting the and 2034 on the back of demographic Economic Outlook and the GDP falling and is not consistent with our time with rationalized costing. The people and a ‘development miracle’. To
Hasina government’s adept handling dividend and rising per capita income, forecast draws on CEBR’s Global GDP growth story. The growth rate will longer time it takes to materialize the me, our strengths are the societal
of regional geopolitics, without getting according to the World Economic Prospects model to forecast growth, be crossing the 8 percent mark soon. projects, the more it will affect private values and peoples’ trust in
drawn into great power plays. League Table (WELT) 2020. inflation and exchange rates. This indicates that the GDP size is sector investment. The private sector Bangladesh. Equally, peoples’
What makes Bangladesh’s growth Bangladesh ranks 40th among 193 The report said 2019 was a bad year increasing. When the GDP size is investors must have a clear picture of aspiration to progress and their
story particularly noteworthy is its countries this year and will rise to for the world economy with the increasing, and the tax revenue the completion of mega projects so resilience as well as their confidence
inclusive nature. A 2016 World Bank 25th in 2034, a spot currently held by weakest GDP growth since the concerning GDP is falling – it means that they can plan their investments in our leadership.”
report found that between 2005 and Belgium, showed the latest edition of recession year of 2009. But the clouds the incremental GDP is untaxed, which accordingly. Successful With continued effort by the
2010, average incomes for the poorest the WELT, produced by London-based started to lift towards the end of the is difficult to understand. operationalization of some Special government to attract more foreign
40% of households grew 0.5% faster Centre for Economics and Business year and the CEBR predicts that According to the WB report called Economic Zones (SEZs) is also very trade by maintaining stable economic
than for the country as a whole. By Research (CEBR), an international expansionary fiscal and monetary Global Economic Prospects, important for boosting private sector conditions, improving the ease of
comparison, the poorest 40% of economic forecaster. In the long run, policy around the world will cause Bangladesh's exports showed signs of investment. business while maintaining their
households in India had worse growth the report said, many Asian economies growth to accelerate in 2020. softening in recent months, after a On one hand, we can see that the focus on digitizing the country will
rates than the national average over a will rise through the ranks of the In Bangladesh, the population has substantial increase in exports to government is trying to spend quite a help maintain this growth level.
similar period. Bangladesh also fares WELT as these countries cash in on risen at a rate of just 1 percent per major trade partners in the last fiscal lot on developing the physical While the growth expectations have
better than India on indicators such as their demographic dividends. year since 2014. This has meant that year. Besides these economic concerns, infrastructure. But on the other hand, fallen by a few decimal points, fingers
infant mortality, school enrolment and In fact, the economy performed well in per capita incomes have grown there are some other risks in the government is not making any can point at the lagging global
life expectancy. The government is 2019, expanding by an impressive 7.8 considerably in recent years. Bangladesh, which was highlighted in significant efforts to increase economy and not the economy itself.
now setting its eyes on achieving a percent. This is, however, below the Government debt as a share of GDP the World Bank report. It said lack of spending on social infrastructure like With the ease in trade wars and
growth rate of 10% over the next three 7.9 percent GDP growth rate recorded rose to 34.6 percent last year, up from progress in reforms to improve tax health and education, which are relaxation of protectionism policies it
years, with the country widely in 2018. 34 percent in 2018. Despite the collection could result in more acute integral to graduate from being one is hoped that the trade levels will rise
expected to leave the Least Developed The WELT tracks the size of different increase, the public sector finances revenue shortfalls in Bangladesh and the Least Developed Country (LDC). not only for Bangladesh but also for
Country (LDC) category to enter the economies and projects changes over remain in good shape. The relatively put further pressure on elevated fiscal Graduating from LDC status is a sign the other economies in dire need of
ranks of developing countries by 2024. the next 15 years, up to 2034. The low debt burden has provided the deficits. that a country’s per capita gross funds.