Strategically located in the Bay of Bengal with over 173 Million young populations ranked 8 in the list of Countries by its population. Over the last decade Bangladesh managed to post a notable economic growth while improving many socio economic indicators during the journey. The agriculture sector, contributing significantly to GDP, features key products like rice and jute. Bangladesh has emerged as a global leader in the garment industry, with the Ready-Made Garments (RMG) sector driving exports and employment. The services sector, including information technology and remittances, has become a vital economic contributor. Growing demand in infrastructure and wide spread income inequality are persistent challenges that the economy will face while achieving many economic milestones. However, the government’s focus on foreign investments, infrastructure developments, and social programs reflects a commitment to achieve sustainable development. Bangladesh’s economic resilience, showcased during global challenges, positions it for continued growth and diversification.

As per the World Bank’s semi-annual update released on country’s economy, Bangladesh made a strong recovery from the COVID-19 pandemic, but the post-pandemic recovery was disrupted in FY23 with rising inflation, financial sector vulnerabilities, external pressure, and global economic uncertainties. Country was on track to graduate from the Least Developed Country (LDC) status by 2026, and further aspires to reach upper middle-income status by 2031.

The ready-made garment industry is the main power house of the Bangladesh’s economy. It accounts for more than 80 pct of the total exports in Bangladesh. An inspiring story of growth of Bangladesh is based on three categories namely Exports, Remittances and Weather. The earnings from the merchandise shipments rose marginally in 2023 owing to the persistently lower demand among western consumers amid high inflationary pressure, the continuation of Russia-Ukraine conflict and the outbreak of the Middle East crisis. RMG, which contribute nearly 85 percent to the national income, couldn’t line to the expectation, largely owing to the fall in orders and the scale down of production in many factories following labour unrest between September and the first week of December when the minimum wage for apparel industry workers was announced. The energy production in always in deficit with rising fuel cost triggered subsidies dented government finance. Rising Middle and affluent population driven aggregate demand spur the import growth.

 
U.S. dollar has become very strong and it has impacted the net remittances by requiring less in numbers in USD amount. Higher importer demand warranted the Bangladesh Bank to sell USD from the reserves and it was depleted to USD 19 billion as of May 2024. Bangladesh’s request for IMF assistance of USD 4.7 Billion was a timely decision taken to retain the investors’ confidence in the economy. IMF already accented to the request of Bangladesh and disbursed the first and second tranches of USD 487 Mn and USD 682 Mn respectively. The lower-than-expected export and remittance earnings have a direct impact on the foreign exchange reserves, which has fallen to a level enough to bring about an unprecedented cost of living crisis and a drastic fall in the value of the local currency.

Bangladesh is on the verge of becoming a middle-income country with a GDP of USD 510.4 Bn. Based on the research of Boston Consultant Group (BCG), Bangladesh MAC (middle and affluent consumers) population will reach 17% (29mn) of the total population by 2025 and 25% (43mn) of the total population by 2030, which was only 7% (11mn) in 2015. This 9-10% average annual growth in the MAC population will likely result in a high growth rate in the domestic consumer demand. Govt. is working in increase Investment GDP ratio from current 31.30% to 40.60% in 2025, 43.41% in 2030 and 46.88% in 2041.

In last decade numerous infrastructure development projects carried out in Bangladesh. The notable projects are the Rooppur Nuclear Power Plant in Pabna, Metro Rail project in Dhaka, Elevated Expressways, Dhaka Airport Expansion Project, Matarbari Deep Sea port, etc. Besides, the Padma Bridge, which is built with full state funding of BDT 300 Bn has been functional from June 2022. Moreover, Metro rail-MRT Line 6 became fully operational from 5th November 2023 from Uttara to Motijheel part. There are many more infrastructure projects like MRT-1, Dhaka-Chattagram Rail Double Line, Cox’s Bazar International Airport etc. on the pipeline.

Bangladesh is not alone in facing the ongoing global inflationary spiral, energy crisis and market disruptions. The CPI based average inflation has increased to 9.74% in 2024 from 8.84% in 2023. Exports had threatened to slow, Bangladesh should moderate its ambition of GDP growth in the current and next fiscal years. Earnings from merchandise shipments rose 1.99 % to USD 55.78 Bn in 2023 and expect to grow 12.4% on FY24. In addition to that, remittances reached USD 21.91 Bn in 2023 and expect to achieve USD 23 Bn in 2024. Growth records of Bangladesh are solid and the trend would continues if the remedial policy measures implemented on timely manner.

A total of $94.27 billion worth of LCs were opened in the fiscal year 2021-22, which dropped to $69.36 billion in the fiscal year 2022-23. LC openings decreased by about $25 billion or 26% year-on-year. It has become difficult for traders to open LCs to import goods due to various restrictions enforced by the regulators. Traders are discouraged from opening LCs as there is a 100% margin on imports of certain products. However, money laundering through over-invoicing has been reduced due to increased vigilance in opening of import LCs. As a result, the total LC amount also decreased.

The capital market in the country remained subdued during end of December 2023 despite the favorable policies backed by BSEC and BBK. The current adverse macroeconomic situation in the domestic and global economies partly and upcoming National Election in January 2024 led to the subdued capital market performance. Climate change is a priority for Bangladesh’s development objectives, as it is one of the most vulnerable countries to extreme weather events. Increased investments in adaptation have made the country more resilient to natural disasters.