Dhaka: Bangladesh, the world’s second-largest apparel exporter, sees economic growth of at least 6% this year, a pace that could make it an outlier in a world set to contract.
Growth will slow to a range of 6%-7% in the year to June 30, Planning Minister Muhammad Abdul Mannan said in an interview on Thursday.
While that is lower than a previously targeted 8.2%, and down from 8.15% a year ago, it’s poised to be the fastest expansion globally — as many economies are staring at a recession amid the coronavirus pandemic.
It isn’t a reason for celebration though for a country known to rely heavily on global demand by virtue of it being the world’s clothing factory. The International Monetary Fund isn’t as bullish with its estimate, putting the nation’s gross domestic product growth at 3.8% for fiscal 2020.
“Growth is clearly way below, a lot below projection,” Minister Mannan said. “We have to reorganize our priorities. Health has become the new urgent subject, which requires much more investment than before.”
More than 80% of the country’s export earnings come from ready-made garment, and the industry is now facing a string of order cancellations.
European and U.S. buyers have canceled or suspended $3.2 billion of orders since March, according to the Bangladesh Garment Manufacturers and Exporters Association. A two-month-lockdown to fight the pandemic has hurt other industries as well.
“The coronavirus has affected us badly,” Mannan said, adding that it was necessary to allow resumption of activity. “This was a bitter pill.”
Bangladesh is scheduled to present its annual budget on June 11, and the spending plan is likely to focus on shoring up other sectors of the economy.
“Expenditure is going up in the next budget as we need more money for health and agriculture and roads and other important sectors,” Mannan said.-Bloomberg
Also read: Finance ministry won’t approve any new govt schemes in FY21 amid expenditure squeeze
Bangladesh received 18.34 billion USD from migrant workers through official channels in 2019. Unofficially, an estimated equivalent amount is sent to Bangladesh by these workers.
By far the largest contributor to GDP is remittance and not garments. Around 15 million people work as migrant workers in Bangladesh constituting 1/10 of its population.
After netting imports garments don’t even bring in 5 billion USD.
If Bangladesh is such a great success story, why 1.5 million people are working as labourers, maids and janitors in the Middle East?
My Personal opinion is somewhat different. you know the ground reality is completely different. I have few relatives of mine who live in Dhaka, Narayanganj and Barisal. They say this is the first time they have realised GDP has no value. The government is not focusing on economically backward classes and after few days the whole ration system is broke. The government announcement of financial aid has little more to offer for the large amount of factory workers who are forced by the different influencial gr kioup to return to the work, mainly garments. People have surprised to see that the health infrastructure is so poor that the government is actually hiding the casualties caused by the pandemic. Somehow I feel the previous growth model has several problems but mainly not accounting the public anguish and discomfort. People are actually struggling with unprecedented corruption and hike in medicine price. Our thoughts and projection must be in accordance with the post pandemic situation, where I think some of our old ideas about growth are going to fly bye.
As a Bangladeshi, I will try my best to not be biased. I see that you mentioned the economic figures and the ground reality are different. The statement is both accurate and inaccurate. First, you said you have few relatives who said they have realized GDP has no value: you must understand the political culture of Bangladesh in order to understand why they made such comment. One political aspect that differentiates Bangladesh from India is that we never express satisfaction with the government, and rightly so, because no matter how well the government is performing, there are always more room for improvements. As a Bangladeshi who recently visited Bangladesh in 2019 after a almost 10 years, I have seen a clear indication of development. As a patriotic Indian you may disagree (and you have the right to), but the Bangladesh that was miles behind India even a decade ago has leaped far ahead in terms of standard of living, individual wealth and planned development.
You are, however, right on the aspect that the phenomenal growth hasn’t been experienced by the most backward classes, but it has been experienced by the poor classes, today Bangladesh’s poverty rate is less than 8% (WB report). The other issues you mentioned are faced by practically every South Asian countries, because we may be the fastest growing, or largest economy, but we don’t have a sustainable institutional system. Looking at the current condition of India and Pakistan, I would say we are not there yet, but Bangladesh is doing a pretty well job to separate itself from the rest of South Asia. Bangladesh and Vietnam have strictly been following the Chinese model since the 90s, regardless of party in power, and if you familiarize yourself with the Chinese development pattern since Deng Xiaoping, you will start to see a similar pattern in both Bangladesh and Vietnam, and if both countries can continue to apply the model the results will be fruitful. If what you say were completely true, Western media outlets would be the first ones to point them out, and yet Bangladesh is being regarded as the next Asian tiger (not-self proclaimed, but by WEF), and investors from the China, Japan and the West wouldn’t line up to invest in billions.
PS: Your relatives couldn’t have afforded to live in Dhaka if they weren’t doing well. We Bangladeshis like to complain a lot. I have relatives whose wealth increased fourfold in last 7-8 years, and I’ve heard them saying the exact same thing your relatives told you. Us complaining doesn’t necessarily mean there are no development. An average Bangladeshi got 5X richer in last 10 years, and so did our expectations. There was a time when a middle class family would consider having electricity for half a day to be an indication of development, today, if electricity is gone for 15 minutes, the same people will start rumbling about how we are going down the drain. If possible, ask your relatives to list some issues they are having to you, then carefully analyze those problems, you’ll realize the problems they are having would be considered a luxury for many of the other third world nations.
As a Patriotic Indian after reading about Bangladesh’s development story right from 1971(when it was 0) till 2020(when it has become richer than most of India(including WB)) I sometimes feel if WB, Tripura and Lower Assam would have joined Bangladesh to form a United Bengal then things would have been much better for us!
Maybe if you derps hadn’t elected communists shitshows to power for 30 years , things would have been different .
You seriously expected growth with communists in power ? are you for real ?
Thank you very much. You have depicted a crystal clear observation about current Bangladesh. As a Bangladeshi residing here I have observed how rapidly Bangladesh has improved in the recent years. People may be unhappy due to lack of democracy or feeedom of speech but their standard of living is definitely far better than earlier, no doubt.