The COVID-19 pandemic has undoubtedly disrupted the global economy with unprecedented reach and impact, posing formidable challenges to policymakers and leaving most governments grappling with a perplexing collection of issues that include supply chain and logistical disruptions. To the surprise of many, Bangladesh has not only managed to minimise the blow of the pandemic but, in fact, it has also done relatively well despite many challenges and headwinds.
Since its independence 50 years ago, Bangladesh has come a long way from an agro-based economy to one that is more industry and service-oriented by leveraging its most valuable asset – the workforce. Today, Bangladesh is one of the fastest-growing economies in the world. Before the pandemic, in FY19, Bangladesh posted the highest GDP growth of 8.2 percent in Asia. And even during the pandemic, the country’s economy grew by 5.4 percent in FY20, surprising many experts. In FY21, Bangladesh’s per capita income grew by an impressive rate of 9 percent and reached $2,227, surpassing India by $280 while Pakistan is already significantly lagging behind by $684. Moreover, according to projections by the UK’s Centre for Economics and Business Research, Bangladesh is expected to become the 28th largest economy by 2030 and the 25th largest in 2035.
Readymade garment exports have played a key role in helping the country achieve this growth with the help of the country’s attractive labour costs, and this has attracted massive international attention. Foreign direct investment has also been growing over the years to take advantage of such low production cost. Political stability in recent years, economic resilience even amid the pandemic, cost-effective labour, and infrastructural development creates a strong business case for investing in Bangladesh. Although the country is facing some challenges in the areas of bureaucracy (red tape) and corruption, the government has been actively working towards reforming the entire system in the best interests of foreign investment.
Even during the pandemic, the country has displayed immense resilience. Although the lockdown in 2020 has been a significant setback, the country began bouncing back in no time as economic activities resumed once the lockdown was lifted. Timely expansionary monetary policy and the 23 stimulus packages (4.44 percent of GDP) have been pivotal in pulling the economy through the ravages of the pandemic. During this time, remittances, Bangladesh’s second lifeline after exports, recorded an all-time high inflow that made the country move one notch up to become the 8th highest remittance earner in the world.
Crisis always creates opportunities and to keep this amazing momentum alive, we now need to re-focus on our limited resources and take a few proactive measures. In order to strengthen our current position as the second-largest RMG exporter, we need to increase direct marketing to consumers, diversify value-added export items and destinations as well as ensure automation in factories to achieve cost efficiency. While graduation from a least developed country is going to be another milestone for us, we need to make sure we are well-prepared to tackle post-graduation challenges. Securing free trade agreements with major trade partners is going to be an integral part of this. In addition, policymakers need to focus on keeping significant budget allocation aside for our priority sectors such as healthcare and education, so we have a healthy and more educated workforce that can contribute towards the sustainably growing economy. The financial sector also requires immediate attention so that the plumbing of money flow becomes more efficient, uninterrupted, and free of leakage and inefficiency.
Bangladesh has managed to successfully overcome almost all obstacles that have stood in its way till date. And the time is now to undertake the right policy decisions and allocate resources efficiently so that Bangladesh can reach its true potential.