By 2025, Bangladesh is forecast to be the 34th largest economy in the world and will continue at second place in South Asia after India, writes Mohammad Rubel for South Asia Monitor
After a disastrous 2020, the New Year has begun on an unpredictable note with people’s minds filled with anxiety, frustration, and worry about what the year have in store for them all.
The COVID-19 pandemic has had a huge negative impact on the lives of people around the world. The world seems to have come to a stop. The pandemic severely damaged the world economy. The GDP growth in most countries has been negative or contracted. All countries, including Bangladesh, will take time to come out of the chaos that was wrecked by the pandemic.
Like all other economies, Bangladesh's economy has also suffered as economic activities and services were disrupted during the pandemic. There has been a downward trend in exports and foreign investment. The pandemic has slowed down the growth momentum that Bangladesh has been experiencing during the last few years.
Moreover, due to the pandemic all work in government and non-government organizations stopped. Unemployment has gone up. Companies folded up or sacked employees as production came to a grinding halt, leading to a high rate of unemployment. The economy was further hurt after the return of expatriate workers to the country. All of this harmed the economic growth. According to the World Bank, the Bangladesh economy is estimated to have grown at 2 percent in the financial year 2019-20. The forecast reflects a sharp downward revision of 5.2 percent from the forecast made in October 2019. According to the South Asia Economic Focus of the World Bank, the real GDP of Bangladesh at constant prices is forecast to grow at 1.6 percent in the year 2020-21 before rebounding to 3.4 percent for the year 2021-22.
According to official data, in the financial year 2020, the economic growth of the country was 5.24 per cent while the growth in the financial year 2019 was 8.15 percent, which was the highest in the history of Bangladesh.
Several studies have indicated that low growth and slow economic activity during the COVID-19 period have had a severe impact on poverty, unemployment, education, and many other social aspects. Besides, the poor performance of several economic indicators such as exports, imports, private investment, foreign direct investment, and revenue collection had hit Bangladesh's economy hard. There is still uncertainty about the economic situation of the country in 2021.
So in such a situation, every opportunity must be seized in the current year and in the years to come with the purpose of developing the nation. It is imperative to understand the current situation so that necessary planning can be undertaken for correcting the future course. This will help the country in reviving the economy as it is correctly said that if the economy goes down, poverty goes up.
How Bangladesh managed COVID-affected economy
The Bangladesh Bank, Bureau of Statistics and various domestic and international organizations are saying that the economy of Bangladesh is moving forward rapidly after overcoming the impact of the pandemic. Some indicators of the Bangladesh economy have started to show positive signs in the recent period.
Bangladesh agriculture and the rural economy have been quite dynamic. In fact, farm growth propelled the nation to faster economic progress and helped in its revival. Bangladesh's thriving manufacturing sector had also suffered a huge blow, especially the ready-made garments sector, which accounts for around 80 percent of the country's total export earnings. At least four million workers depend on the textile industry for their livelihood. The exports of readymade garments (RMG) are all set to increase from February this year. Most importantly the unemployment of expatriates has decreased and income has increased, which means remittances have increased.
From July 1 to December 10 of the 2020-21 fiscal year, the country received a total of 11.70 billion USD remittances, which is 43 percent more than the same period of the previous fiscal year. Besides, megaprojects have gained momentum.
The crisis-ridden stock market seems to have regained momentum. The bank has sufficient funds for investments. If Bangladesh's current economic development continues, the country will surely be the 25th largest economy in the world by 2035.
Some good news
According to the World Economic League Table 2021 of British Economic Research organisation Center for Economic and Business Research (CEBR), Bangladesh will be the 25th largest economy by 2035 if the economic expansion which Bangladesh is going through continues.
The report has forecasted about the economic growth of the countries over the next year and also the next 15 years. As per the index of 2020, Bangladesh is now the 41st economy in the world.
By 2025, Bangladesh is forecast to be the 34th largest economy in the world and will continue at second place in South Asia after India.
Between 2020 and 2035, the CEBR forecast that Bangladesh's position in the World Economic League table will improve considerably, with its ranking rising from 41st to 25th by 2035.
Although this news has brought some cheer, there still remain some obstacles to the overall development of the country for example poverty, unemployment, unskilled labor, corruption, lack of transparency and accountability, and poor infrastructure, etc. still remain the biggest challenges. So Bangladesh biggest challenge is to ensure that these problems are resolved.
The development of the country will be possible only if we face these challenges and overcome them. Achieving the UN-mandated Sustainable Development Goals (SDGs) by 2030 and becoming a high-income country by 2041 will not be easy. Bangladesh has to ensure that the benefits of the growth should reach everyone equally. It should be ensured that all people are able to enjoy the benefits of economic prosperity and get equal opportunities that would help in reducing inequality between the rich and poor. Only then the country will be able to achieve the desired success for its people.
(The writer is a Ph.D. scholar in finance and international trade, Kongju National University, South Korea. The views are personal)