LightCastle Partners has recently released an economic update report on “Bangladesh An Emerging Tiger Biding Its Time”. LightCastle Partners provide in-depth analysis and statistics on Bangladesh market and update their report on a quarterly basis. Their reports include data and analysis of consumer preference, market trends, and business models which provide thorough information and helps make effective business decisions for users.
This report shows how Bangladesh economy is experiencing a stable growth. Despite steady growth in the economic and social sector, there are some modifications that could pace up the system. Here is the jist of
Annual GDP growth & inflation
The economy of Bangladesh has maintained a constant growth over time in spite of all the challenges. The annual GDP growth had been constantly 6% over the past decade but the annual growth rate increased to 7.11 in October 2016 showing a positive trend for the upcoming years. The prime drivers behind the GDP growth are increased private consumption, remittances from migrant workers, increased export to USA and EU and increased private investments. The country has also been able to achieve the lowest inflation rate (5.03%) in December 2016 which is the least since 2004.
60% of the Bangladesh’s population is aged below 30 years which will benefit the country in the upcoming years. The official unemployment rate is 5.1% which is mostly in the primary sector. To utilize the incoming young population of the country, increasing number of jobs would have to be driven by the secondary sector, which can potentially employ many semi-skilled and unskilled workers from primary sector.
Bangladesh’s fiscal deficit is quite low in Bangladesh. In the FY2016 budget, the government is targeting a budget deficit of 4.7% of GDP. The reason for the persistent fiscal deficits is mainly undiversified revenue base. Low revenues are mainly due to low per capita income levers and a lower percentage of tax collection resulting from administrative constraints and corruption.
Balance of payment & remittance
Bangladesh benefits from a positive current account balance due to growing RMG export and steady remittance flow. Current account balance has been positive resulting in record high foreign currency reserves (USD 32.09 Billion, Jan 17). The balance of payments has mostly been positive over last 4 years, but in the recent past has dipped to negative due to declining remittances connected to lower oil prices. The flow of remittance has been lower compared to the previous fiscal year. This is attributed to falling oil prices in the international market.
External investments are very crucial for the growth of a country. Bangladesh government has offered preferential investment policies, aimed at reducing bureaucratic red tape, by reforming Board of Investment (BOI) into Bangladesh Investment Development Authority (BIDA). The government has also empowered the local conglomerates in setting up special private economic zones. Local investors are also playing a vital role in creating jobs and development of the country. According to a survey, 52% investors would make more investment in the upcoming years.
Bangladesh has unlocked the status of Lower Middle Income Country (LMIC) on May 2016 revealed by the World Bank. By assuming constant population growth and adopting WB projections, the country is expected to achieve middle-income status within 2025.
Bangladesh is seeing an impressive growing in economic and social sectors. But for further growth, it needs to work on a few things.
- With a growing working age population, growth in secondary sector is imperative for absorbing the semi-skilled workers currently employed in the unproductive primary sector.
- The government must look to secure alternate markets for Bangladeshi manpower in South East Asian economies.
- The government should look to shift financing towards improving transport connectivity, as well as power generation.
- Investments from international and local investors through PPP arrangements must be sought.
- The government should ensure trickling down of income across different socio-economic class.
- The market entry process must be digitized, enabling potential international investors to easily access different tools for averting bureaucratic red tape.
If you want to read the full report, visit http://www.lightcastledata.com/drive/