Once known for topping all the wrong lists, Bangladesh might be well on its way to becoming the new ‘Asian Tiger’. From what was considered an economic basket case to being the 41st largest economy in the world, it is the unforeseen success story everyone has been talking about. Centre for Economics and Business Research (CEBR) in their latest World Economic League Table (WELT) has published the growth prospects and rankings of all 193 countries. Bangladesh has the potential to climb 19 steps up the ladder by 2033 and secure a place amongst the 25 largest economies. If GDP grows by 7.9% as forecasted by the Economist Intelligence Unit (EIU), it could even become the second best performing economy in 2019.
While nobody can refute how remarkable this progress is, it is imperative to assess the situation through a much wider lens. At a time when global power is evidently shifting to the East, Bangladesh cannot let opportunities slip away. Of course, the ride upwards is never steady; but we must ensure our economy is on a growth train that only moves forward.
If our main target is sustaining this robust growth we need to look into the driving forces behind it. Exports account for a large portion of the country’s GDP but it could soon be – if not already– a matter of concern. With demand for imports soaring, last year saw a record deficit in both the trade balance and the current account. The much celebrated LDC graduation – another milestone achievement for Bangladesh – could add further pressure. After graduation in 2024, Bangladesh will lose trade preferential treatments, and consequently 8 percent of total exports due to imposition of additional tariff. Development economists believe that high level dependence on just one exporting industry – RMG in the case of Bangladesh – could prove to be detrimental. Thus addressing domestic competitiveness and export diversification should be prioritised
Bangladesh economy also owes its rapid growth to the 2.5 million overseas workers who remitted a total of $14.98 billion in the previous fiscal year. The government should ascertain that this massive inflow is not only maintained but also channeled legally and efficiently. If a safe and exploitation-free migration system is not established to keep this income-generating sector healthy, there could be a severe backfire in terms of national earnings and employment. Moreover, the influx of 750,000 refugees that could not have been avoided on humanitarian grounds, continues to strain the economy. Although other nations and international bodies have provided some support, Bangladesh - poorest of the ten most populous countries in the world - is having to bear the brunt of this crisis. With no signs of repatriation, Rohingyas may have to be accommodated for the next seven years. This will cost Bangladesh another $4,433 million for food and shelter, and significantly affect the country’s tourism and security.
Even if we assume that Bangladesh is all geared up to face the aforementioned challenges, should we be convinced just yet?
According to reports by Bangladesh Bureau of Statistics (BBS), the income share of the poorest 5 percent of our population was 0.23 percent of overall income, a sharp fall from 2010 when it was 0.78 percent. On the other hand, share of income of the richest 5 percent grew to 27.89 percent, up from a 24.61 percent. Sitting in the comforts of our air-conditioned homes, these numbers may seem rather exaggerated. In fact, Bangladesh did manage to reduce extreme poverty from 34 percent to 13 percent in only 16 years.
But we cannot let the decline in the poverty rate distract us from the widening income inequality in both rural and urban areas. Economic growth caused by booming manufacturing and service sector is the very reason behind this wealth gap. The shrinking agricultural sector means its share in GDP is also declining. A small ultra-elite society is benefiting from economic growth at the expense of the many.
Trying to question one’s moral compass might be besides the point here, but economically speaking, it's not exactly win-win either. As suggested by economist Joseph Stiglitz, growing inequality of income leads to under-investment in education and hence a less productive workforce. Resentment and dissatisfaction from the lower income levels can also result in social unrest and chaos. The government needs to formulate methods of income redistribution without stalling Bangladesh's growth. It is important that industrialists still have incentives to invest but nobody is exploited in the process. For long-term economic growth human capital development is essential. However, it is still below par in Bangladesh compared to competing economies.
Fraudulence, nepotism and bribery have seeped into our society in a way that hoping for a corruption-free system is now considered overly optimistic. We take it as given that it is one of those problems that will remain forever unsolved. The unusually high default loans wrecking our banking sector is an example of the terrible consequences of corruption. A lot of resources are wasted through inappropriate use of funds and bureaucracy in government institutions.
We have to free ourselves of the perception that any economic activity is productive. Construction of one kilometre of road stretch in Bangladesh requires about Tk 60 crore on average ie. six times of what it takes in India; yet our road network is ranked one of the worst in the world. This goes to show that increase in GDP due to government expenditure doesn't necessarily equate to any real development. The mega projects that are underway are creating plenty of opportunities to sponge huge amounts of money off the public at every stage of construction. Unless completed within time, these projects will continue to do more harm than good to the economy without us even realizing.
That being said, as an economy that has demonstrated terrific resilience during times of war, famine and natural disasters, Bangladesh will not fall short of current expectations either. Socioeconomic policies emphasizing on gender equality, healthcare and information technology have pushed the country up by three ranks in the Global Human Development Index (HDI) 2017. Given that good governance, economic inclusion, and infrastructural changes are ticked off the list, Bangladesh can easily accomplish its growth targets and at the same time, fulfill commitments to the 2030 Sustainable Development Goals.
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