A resilient economy

Bangladesh has an inclusive economy and its trajectory of growth is promising

Bangladesh economy is poised to grow at a rate of 6 per cent, and is the 11th emerging market in the region. Apart from being the 44th largest economy in the world, it is one of the most enterprising in South Asia in terms of its industrious labour, agrarian and industrial output. International lenders give a thumbs-up to Dhaka for its concern for lower-income index, and its policies to promote entrepreneurship. The Asian Development Bank, the World Bank and the International Monetary Fund have, of late, upped their aid. With a population of more than 160 million, the size of the economy is to the tune of $180 billion.
It has come a long way since its independence in 1971, and is politically stable and economically viable entity today. Garment exports, the backbone of its industrial sector, accounts for more than 80 per cent of total exports and surpassed $25 billion in 2016. Ready-made garments account for a staggering $27 billion, and grow at 2 percentage points. Emigrant remittances account for as much as 8 per cent of GDP, and Bangladeshi labour is high in demand in the Middle East, Southeast Asia and Europe. It has a sound base for entrepreneurship, and has posted wonders in the last two decades.
The country's workforce and an expanding consumer market has made it a magnet for investment in the region, which is why China and other major economies have come up with several big-ticket projects in Bangladesh, linking it with rail and navigation networks, as well as buoying its energy production capabilities. Russia, China, Japan, and the European Union have pumped in billions of dollars in the fields of oil and gas, power generation and communications.
Despite tough challenges at home in the form of political upheavals, natural calamities and downslide of global economy, Bangladesh has fought back with resilience. The second largest economy in SAARC has posted soaring exports, keeping its wheel of growth moving at a sustainable speed. This has won it international acclaim, and the economy is rated in positive index by investors and lenders. According to the Bangladesh Bureau of Statistics, the GDP growth in the 2016-17 fiscal was 7.28 per cent but international donors believe it to be under 7 per cent. Higher-than-expected turnout in the manufacturing and services sectors are acting as a bonanza for the economy, and is complimented by strong consumption and an enriched investment profile.
Nonetheless, Bangladesh faces a tricky route as it tries to overcome decline in agricultural growth and power shortage. Primarily an agrarian economy, its pattern of growth has helped it overcome poverty and the pivot of its success is in eliminating the monopoly of landholding class. More than 70 per cent of people directly or indirectly are related to farms, and estimates say around 85 per cent of rural households rely on agriculture as their main source of income. The industrial sector contributes around 10 per cent of employment.
Political uncertainty before the nation goes to poll this year can impact private investment. Moreover, food inflation, being on track with respect to SDGs, challenge of growth of exports and remittance and governance issues in the banking sector are some of the critical challenges for the Bangladeshi economy. Likewise, stimulating the private sector investment is another major task. A rising GDP growth rate during this decade is driven by factor accumulation and government expenditure. But the sluggish private investment and rise in public investment continues as the share of public investment in total investment slump. Last but not the least, stagnant private investment, weak export growth, and declining remittances have impacted the job market.
Bangladesh has a liberal investment policy that allows 100 per cent foreign direct investment. Moreover, the government plans to invest in human development, and has made extraordinary efforts to uplift the skills, educational background and necessary vocational training as an instrument of development in the last two decades. Bangladesh is one of the few middle-income countries whose budget allocations for health, education and infrastructure development are sizeable. Likewise, it has a resounding banking sector, and its youth are known for their entrepreneur and scholarly skills.
The backbone of economy, however, are remittances. Bangladeshi expatriates have made a mark for themselves by virtue of their hard work, especially in the fields of hospitality industry and household services. Remittances to the tune of $15 billion are an inevitable source of strength that help in addressing the country's trade deficit and developmental expenditures.
Dhaka needs an inclusive growth strategy, coupled with sustainable policies, which would help it materialise its reforms. Dubbed as the tiger economy of Southeast Asia, Bangladesh has a major role to play in the region as it overcomes obstacles at home. Due focus on its macro-economic management and harnessing industrial production can uplift the country's economy to new heights of success.
- mehkri@khaleejtimes.com

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