Bangladesh is now the talk of the South Asian region, due to its astounding economic growth. In 2019, the real Gross Domestic Product (value of total production of goods and services) growth rate in Bangladesh was 7.8 percent, the highest in South Asia. In fact, since 2015, the real GDP growth of Bangladesh has hovered around 7 percent, which could be described as very satisfactory. Therefore, for continuous five years (2015 to 2019), Bangladesh was a high-growth economy.  

Although Bangladesh’s real GDP growth is projected to slow down (due to the pandemic) to 2.4 percent in 2020 (as per the World Bank report), this would still be among the highest in the South Asian Association for Regional Cooperation (SAARC). In 2021, the country is projected to achieve real GDP growth of 4.4 percent, one of the highest again, in the region.

The sustained growth rate of Bangladesh has attracted world attention. But its growth story is not a recent phenomenon, as generally perceived. The country that came into being in 1971 following a violent liberation war has been growing steadily over the last four decades.

Bangladesh’s average economic growth has steadily increased in each decade since 1980. Average GDP growth for Bangladesh has been higher than the world’s average GDP growth over the last three decades since 1990. It has been higher than the average growth rate of South Asian countries since 2010. Again, from 2015 onwards, Bangladesh has emerged as one of the fastest-growing economies in the world. So contrary to popular perception, the growth story of Bangladesh is not sudden sunshine; the weather was bright for the last four decades.

Macroeconomic indices  
                   
What made Bangladesh progress, while some other countries in South Asia lagged? Well, currently, Bangladesh’s economy is buoyant due to three factors: export, remittances from abroad and a resilient private sector. But it should be kept in mind here that the growth story is not limited to these factors only; the country is doing well in many other macroeconomic indices. Manufacturing and service sectors are growing, and the country’s dependence on agriculture is gradually decreasing.

However, exports (mainly ready-made garments) and remittances currently constitute major sources of revenue although other segments are also growing. Bangladesh is now a leading exporter of ready-made garments to different parts of Europe, the two Americas, Japan and other areas of the world. The country is now second only to China in garment exports.

According to sources from Bangladesh Bank, exports in the year 1991 were only 10 billion USD. But it jumped to 40 billion USD in 2019; a 4 times growth in 28 years. Remittances from the Bangladeshi diaspora were less than 1 billion USD in 1991, but they rose to nearly 20 billion USD in 2019. Such remittances mainly come from migrant low-paid workers residing abroad. Therefore, unlike many other countries, remittances from abroad to the country of origin are still low, as far as Bangladesh is concerned. But such remittances have benefitted the economy to a great extent.

As per Bangladesh Bureau of Statistics sources, industry’s contribution to the country’s GDP has grown substantially over the years. In fiscal year (FY) 1980, Industry’s contribution to GDP was 17.08 percent. It rose to 33.26 percent in FY 2018. So, the industrial sector contributes one-third of the country’s GDP. On the other hand, in 2018, agriculture contributed only 14.23 percent or only one-seventh to Bangladesh’s GDP. Therefore, the country is steadily moving towards becoming an industrial economy.

Infrastructural development

Strengthened by sustained economic growth, Bangladesh has now undertaken infrastructural development projects, mainly in the area of transport and communication. Traditionally, poor connectivity across the nation hindered economic development. The government of Prime Minister Sheikh Hasina has initiated several infrastructural development projects to ensure Bangladesh runs fast and grows substantially.

Notable among these projects is the Padma river bridge which will connect the western districts, cut off by the mighty Padma river, to Dhaka, the capital city and the rest of the country. The 6 km bridge will cost USD 3.7 billion, the biggest transport project so far; and will be opened in 2022.

Projects like the Chottogram–Cox Bazar rail link; Dhaka–Chattogram express railway; Karnaphuli underwater tunnel; Dhaka elevated expressway; Dhaka Metro rail system; Chottogram–Teknaf marine drive, projected to be world’s longest marine drive; have been undertaken or planned. Most of these projects will be completed by 2024, easing rail, road and water transport in the country, and boosting business.

Apart from transport projects, Bangladesh has started building a nuclear power plant in Rooppur; a coal power plant in Rampal; IT hubs and medicinal plants. Moreover, Bangladesh launched its first commercial satellite from Florida, USA, into space in May 2018. The satellite, named Bangabandhu-1, will help in the digitalization of Bangladesh. The country is only fourth in South Asia with its commercial satellite. There is little doubt Bangladesh - once infamously dubbed a "basket case" by US Secretary of State Henry Kissinger - is on the move.

A Competitor to India?                   

Debates continue among economists as to whether an export-oriented economy, which Bangladesh presently is, can sustain its growth over a long period. There are examples for and against this proposition. Without entering into this debate, it may be noted here that Bangladesh is planning to lessen its dependence on exports and remittances to sustain the current economic progress. The country is eyeing to become a medicine manufacturer; IT (Information Technology) and FDI (Foreign Direct Investment) destinations, as well an agro-based industrial power.

The policymakers in Bangladesh believe that the nation has immense potential in these areas. Alongside these, garment exports and remittances will continue to earn valuable foreign exchanges. Bangladesh is quietly planning to enter into areas where India has made its mark. If Bangladesh reaches its goal within a short period, it will emerge as a worthy competitor to India in the region.

Politically, the Sheikh Hasina government has adroitly maneuvered a middle but autonomous road for Bangladesh, away from the influences of two regional powers, China and India. Although Bangladesh is taking help from these two nations for its economic development it has maintained a safe distance from the India-China conflict.

Simultaneously, Bangladesh has partnered with the two nations in steady development cooperation, without succumbing to the influences of either. If Bangladesh can continue its economic progress, domestic political stability, and foreign policy success, it is destined to become a notable star in South Asia.      

(The writer, an analyst on international relations, served as professor and head of political science at Presidency University, Kolkata. The views expressed are personal. He can be contacted at akchatjee@gmail.com)