According to the IMF, Bangladesh’s economy is the second fastest growing major economy of 2016, with a growth rate of 7.1%. Dhaka and Chittagong are the principal financial centres. The financial sector of Bangladesh is the second largest in the subcontinent. It has also developed self-sufficient industries in pharmaceuticals, steel and food processing. Bangladesh’s telecommunication industry has witnessed rapid growth, receiving high investment from foreign companies. Bangladesh also has substantial reserves of natural gas and is Asia’s seventh largest gas producer. Offshore exploration activities are increasing in its maritime territory in the Bay of Bengal. It also has large deposits of limestone. The government promotes the Digital Bangladesh scheme as part of its efforts to develop the country’s growing information technology sector.
Bangladesh’s GDP growth has reached 7.24% in the 2016-17 fiscal years – an all-time high in the history of the country. GDP growth rate in Bangladesh averaged 5.69% from 1994 until 2016. In addition, the per capita income has increased to $1,602, according to Bangladesh Bureau of Statistics’ provisional estimate based on the first nine months of the outgoing fiscal year. In the 2015-16 fiscal year, the GDP growth was 7.11% and per capita income at $1,465. In FY2012-13, the GDP growth in Bangladesh was 6.01%, 6.06% in FY2013-14 and 6.55% in FY2014-15. Bangladesh is considered a developing economy. Yet, almost one-third of Bangladesh’s 150 million people live in extreme poverty. In the last decade, the country has recorded GDP growth rates above 5% due to development of microcredit and garment industry. Although three fifths of Bangladeshis are employed in the agriculture sector, three quarters of exports revenues come from producing ready-made garments. The biggest obstacles to sustainable development in Bangladesh are overpopulation, poor infrastructure, corruption, political instability, and a slow implementation of economic reforms.
Export and Import
Bangladesh is the 55th largest export economy in the world. In 2015, Bangladesh exported goods worth $35.7 billion and imported goods worth $38.3 billion, resulting in a negative trade balance of $2.6 billion. In 2015, the GDP of Bangladesh was $195 billion and its GDP per capita was $3.34 thousand.
The top exports of Bangladesh are non-knit men’s suits ($5.6 bn), knit T-shirts ($5.28 bn), knit sweaters ($4.12 bn), non-knit women’s suits ($3.66 bn) and non-knit men’s shirts ($2.52 bn). Its top imports are heavy pure woven cotton ($1.33 bn), refined petroleum ($1.25 bn), light pure woven cotton ($1.12 bn), raw cotton ($1.01 bn) and wheat ($900 mn). Leather and animal gut articles were the fastest-growing among the top 10 export categories, up by 1,205% for the 7-year period starting in 2009 and led by suitcases, handbags and camera cases. The top export destinations of Bangladesh are the United States ($6.19 bn), Germany ($5.17 bn), the United Kingdom ($3.53 bn), France ($2.37 bn) and Spain ($2.29 bn).
In 2015, Bangladesh imported $38.3 billion making it the 54th largest importer in the world. During the last five years the imports of Bangladesh have increased at an annualised rate of 8.7%, from $24.9 billion in 2010 to $38.3 billion in 2015. The most recent imports are led by heavy pure woven cotton which represents 3.47% of the total imports of Bangladesh, followed by refined petroleum, which account for 3.27%. Other import items are cotton, machinery and equipment, chemicals, iron and steel, foodstuffs. The top import origins are China ($13.9 billion), India ($5.51 billion), Singapore ($2.22 billion), Hong Kong ($1.47 billion) and Japan ($1.36 billion).
The two-way trade between Bangladesh and India is $7 billion. The trade is set to go at $10 billion by 2018 through ports. Bilateral trade between India and Bangladesh stood at $ 6.6 billion in 2013-14 with India’s exports at $6.1 billion and imports from Bangladesh at $462 million, representing more than double the value of $2.7 billion five years ago. The Bangladesh government has approved a revised trade deal with India under which the two nations would be able to use each other’s land and water routes for sending goods to a third country. Under the deal, India would also be able to send goods to Myanmar through Bangladesh.
The trade relations between Bangladesh and Afghanistan are improving with time. Bangladeshi jute, ceramics and pharmaceutical products have good demand in the Afghan market. Afghanistan has expressed interest to recruit manpower from Bangladesh for its reconstruction efforts. In order to expand the bilateral trade, Afghanistan has proposed to create direct business link with Bangladesh.
The Bangladesh-Sri Lanka joint working group was formed in 2013 to increase trade. The two countries have agreed to sign a shipping agreement. In 2013 bilateral trade between the two countries crossed the 100 million dollar mark.
Maldives has a significant Bangladeshi migrant worker population and has encouraged the inward migration of Bangladesh workers. Bangladesh has a High Commission in Maldives. The Maldivian government regularised the immigration status of more than 16 thousand Bangladeshi migrants in 2009. In 2011, Bangladesh exported goods worth $.72 million and imported $1.46 million from Maldives. Official estimates suggest there are 70 to 80 thousand Bangladeshis in Maldives.
The Bangladesh and Nepal volume of trade stands at less than $60 million per year. In 2008-09, Bangladesh’s exports to Nepal were worth $6.7 million. Its major exports include pharmaceuticals, garments, plastics, handicrafts and other goods. Nepal exported $53 million worth of goods, which are largely agricultural products such as pulses, lentils, rice and wheat.
Bilateral trade relations between Bangladesh and Pakistan have been slow during the past few years. During the eleven-year period between 2000–01 to 2010–11, Pakistan export to Bangladesh grew at an average annual rate of 27.6% and imports from Bangladesh grew at the rate of 9.2%. The total value of trade (export plus import) between the two countries in 2010-11 was about $983 million.
Bangladesh and Bhutan signed a bilateral trade agreement in 1980, granting each other the “most favoured nation” preferential status for development of trade. As of FY 2009-2010 Bangladesh’s total imports to Bhutan stood at $25 million, while its exports to Bhutan accounted for $3 million. The agreement was renewed during the official visit of Bangladeshi Prime Minister Sheikh Hasina Wajed to Thimphu in 2009. In 2014, Bangladesh granted duty-free access to 90 products from Bhutan.
The stock market capitalisation of the Dhaka Stock Exchange in Bangladesh crossed $10 billion in November 2007 and the $30 billion mark in 2009, and $50 billion in August 2010. Bangladesh had the best performing stock market in Asia during the recent global recession between 2007 and 2010. Major investment in real estate by domestic and foreign-resident Bangladeshis has led to a massive building boom in Dhaka and Chittagong.
Investing opportunities in Bangladesh have seen a rise since 2011 with Saudi Arabia trying to secure public and private investment in oil and gas, power and transportation projects, United Arab Emirates (UAE) is keen to invest in growing the shipbuilding industry in Bangladesh encouraged by comparative cost advantage and Tata, an India-based leading industrial multinational is planning to invest Rs.1500 crore to set up an automobile industry in Bangladesh. The World Bank is planning to invest in rural roads and Rwandan entrepreneurs are keen to invest in Bangladesh’s pharmaceuticals sector. Samsung sought to lease 500 industrial plots from the export zones authority to set up an electronics hub in Bangladesh with an investment of $1.25 billion. In 2011, Japan Bank for International Cooperation ranked Bangladesh as the 15th best investment destination for foreign investors.
Despite relatively strong economic growth over the past decade, investment climate constraints, deficiencies in energy and transportation infrastructure, and an opaque regulatory environment have prevented Bangladesh from achieving higher growth.
Shortages of land, natural gas, and power remain major impediments to investment. Corruption is also widely perceived to be endemic at all levels of society and discourages investments and inhibits economic growth. Reputable companies have complained that the Bangladesh National Board of Revenue (NBR) is consistently subjecting businesses’ prior year tax returns to renewed scrutiny.
While this process is taking place, normal business activities such as banking, immigration procedures, and branch office licensing permissions may be slowed. Some companies have either exited the market or minimised their presence as a result of NBR’s actions. Political unrest, largely stemming from local or national elections, has at times shut down business operations and impacted supply chains. Increasing security challenges have hampered at least some investment and trade opportunities.