Overview of Bangladesh Economy
Strong political leadership of the Hon’ble Prime Minister Sheikh Hasina together with socio-political stability has helped Bangladesh to achieve a decade-long average economic growth rate of 7.0 per cent which touched 8 per cent in the fiscal years 2017-2018 and 2018-2019. This performance has put Bangladesh among the top ten fastest-growing economies in the world. The International Monetary Fund (IMF), in its World Economic Outlook 2019 publication, ranked Bangladesh as the 39th largest economy in the world in nominal terms and 30th largest by purchasing power parity.
Hon’ble Prime Minister of Bangladesh
It also estimated that the GDP of Bangladesh at US$347.991 billion in nominal terms and US$860.916 billion in PPP. On the other hand, foreign exchange reserve of the country has also shored to US$32.93 billion on April 2020. International financial institutions have projected that by 2030 Bangladesh will be the 24th largest economy in the world. Sound macroeconomic management, structural reforms, massive investments in human resources and infrastructures are the key factors for this economic miracle.
An aerial view of Dhaka, the financial center of Bangladesh
Agricultural sector is still the largest employer in Bangladesh. It accounts for 37.6% of the total work force and 13.1% of the GDP. Industry employs 21.4% and represents 27.8% of GDP. Services account for 53.5% of GDP and employ 39.8% of the total workforce.
Breakdown of Economic Activity by Sector | Agriculture | Industry | Services |
Employment by Sector (in % of Total Employment) | 37.6 | 21.4 | 39.8 |
Value Added (in % of GDP) | 13.1 | 27.8 | 53.5 |
Value Added (Annual % Change) | 3.0 | 10.2 | 6.2 |
Source: World Bank, Latest Available Data
The Ready Made Garments industry (RMG) and remittances from oversea workers are the two major contributors to Bangladesh’s economy. RMG contributes 13% to the GDP and employs nearly 4 million workers mostly female. In the 2018 – 2019 FY, remittance inflow hit record $16.4 billion. This was 9.47% higher than the previous year. The remittance in 2017-18 fiscal year was $14.98 billion. Nearly 10 million Bangladeshis are currently working and living abroad.
A garments factory in Bangladesh
Merchandise export of Bangladesh is also growing steadily. In 2018-2019 FY, the country’s export reached to $40.53 billion which was 10.55 percent higher than the previous fiscal year. In 2017-18, Bangladesh exported goods worth $36.66 billion. Garment export earnings, which accounted for over 84 percent of the national exports in 2018-2019 FY, amounted to $34.13 billion, registering an 11.49 percent year-on-year growth. Bangladesh mainly exports knitwear, woven garments, leather & leather products, agricultural products, jute and jute products (natural biodegradable fiber), pharmaceuticals, electrical and electronic goods, ceramic products, bicycles, IT products, frozen foods (fish and seafood) and ocean-going feeder vessels and ferry boats. In 2018-2019 FY total import of Bangladesh stood at US$55.44 billion. Main imports are capital machinery, cotton, petroleum products, electrical equipment, iron and steel, plastic and rubber products, vehicles, metal and metal products, chemicals, mineral products and edible oils. Bulks of the goods are shipped through Chittagong Port.
Chittagong Sea Port
FDI inflow in Bangladesh has gradually grown over the years. The country has one of the most liberalized industrial policies in the region which focuses on export oriented and private sector led growth. Bangladesh also offers a wide variety of generous fiscal incentives and facilities to attract foreign investors. According to the UNCTAD’s 2019 World Investment Report, FDI inflows to Bangladesh closed at USD 3.61 billion in 2018 (an increase compared to USD 2.15 billion in 2017). According to the same report, equity investment in Bangladesh increased by 108.6% to $1.12 billion, which was $0.54 billion, while reinvestment increased by 2.32% to $1.30 billion. To accelerate economic growth and diversification, Bangladesh established two new agencies in 2010, tasked with leading the development of economic zones and high-tech parks: the Bangladesh Economic Zones Authority (BEZA) and the Bangladesh Hi-Tech Park Authority. Meanwhile, Bangladesh Government has established the Bangladesh Investment Development Authority (BIDA) on 1 September 2016 through an act by merging Board of Investment and Privatization Commission. The newly constituted Bangladesh Investment Development Authority (BIDA) is expected to provide all necessary services for investors from a single window.
Hon’ble Prime Minister Sheikh Hasina, since coming to power after a massive election victory in 2008 general elections and thereafter winning successive elections in 2014 and 2018, has taken a number of mega projects to boost up the country’s economy. Once these projects are completed, it is expected that the country’s GDP will increase by 3 to 4 percent. The major ongoing mega-projects included 2400 MW Rooppur Nuclear Power Plant Project, the 4.20 KM Padma Bridge Project, 1320 MW Rampal Power Project, Dhaka Mass Rapid Transit Development Project, 1200 MW Matarbari Power Plant Project and Karnaphuli Bangabandhu Sheikh Mujibur Rahman Tunnel Project.
Padma Bridge
The construction of multipurpose road-rail Padma Bridge across the Padma River is going on in full swing. As of 30 May 2020, 30 spans out of 41 spans have been installed and with this, 4.50 KM out of the total 6.15 KM of the bridge is visible. This multi-billion-dollar bridge project is financed completely from domestic resources. Once completed, Padma Bridge is going to be one of the engineering wonders of the world as it has involved some of the newest engineering methodologies in pile design and river training works.
Ongoing construction of Padma Bridge
Rooppur Nuclear Power Plant
Rooppur Nuclear Power Plant Project is the biggest single project in the history of Bangladesh. The construction of this 2400 MW nuclear power plant is going on as scheduled. The Russian Federation is providing technical and financial support for this $12.65 billion mega project. Having begun in 2016, the project is scheduled to be completed within 2024. The commissioning of unit 1 is planned in 2023 while the commissioning of Unit 2 is planned in 2024.
Dhaka Mass Rapid Transit
Bangladesh government with a view to ease traffic congestion in capital Dhaka has taken a 20-year transport policy, Strategic Transport Plan (STP) to build six metro rails by 2030. Currently it is constructing the MRT (Mass Rapid Transit) Line-6 and other metro rail lines are going to be added in the future. Till November 2019, 38.35 per cent progress was achieved in MRT-6. The MRT-6 project will cost around US$2.6 billion of which the Japan International Cooperation Agency (JICA) is providing $1.9 billion at 0.01% interest rate. The rest would come from domestic sources of the Bangladesh Government. The construction work of this project is going on in full swing aiming to be completed by the end of 2021. The metro line-6 consists of 16 elevated stations and 20 km long electricity-powered light rail tracks from Uttara to Motijheel.
Under-construction MRT Line - 6
Karnaphuli Bangabandhu Sheikh Mujibur Rahman Tunnel
Karnaphuli Bangabandhu Sheikh Mujibur Rahman Tunnel, the underwater expressway, is on course to be completed within 2022 as scheduled. The tunnel will be the first of its kind in Bangladesh and is expected to improve the Dhaka – Chittagong -Cox’s Bazaar highway network. The four-lane tunnel will have a total length of around 3.43 km with an approach road of 5.63 km. The cost for this project is estimated at US$1.05 billion where China will be providing US$705.9 million. When completed, this underwater expressway will connect Chittagong city to the other side of Karnaphuli River and is expected to boost economic activities, trade and commerce and support the industries in the region. The project is also expected to improve the capacity of the Chittagong Port.
