Record breaking growth
Bangladesh is well on its way to shattering economic growth projections for this year. The country’s official statistics agency, the Bangladesh Bureau of Statistics (BBS), estimated that economic output will grow by 7.24% in fiscal year 2016-17.
In Bangladesh, a fiscal year begins in July and ends in June of the succeeding year.
The BBS estimates are based on data for ten months until April.
The agency also estimates that the country’s per capita income will increase to $1,602 at the end of the current fiscal, up 9.4% from $1,465 a year ago.
If the country is able to achieve this pace of growth, it would shatter growth estimates. The World Bank had estimated the country’s growth pace at 6.8% for the year. The projected growth would also better the estimate by the country’s government which had put a target of 7.2% growth for this year.
This, coupled with higher estimates for per capita income, shows that the country is tightening its grip on poverty. The World Bank had upgraded Bangladesh to the status of a lower middle income country in 2016 due to increased gross national income (GNI) per capita which qualified it according to the set breakpoints.
Where to from here?
Even though the World Bank has applauded the country’s stable economy in the face of numerous headwinds cited in its ‘Bangladesh Development Update’ report for May 2017, it has said that the country will grow between 6.4% and 6.8% in this coming fiscal year and the next.
The reason for its projections were based on its assessment that a fall in export growth and remittances would hold back the economy.
According to the institution, export growth in the ten months of the fiscal year ending in June was 4%, down sharply from 9% in the same period a year ago. Meanwhile, remittances in the same period declined by a sharp 16% after falling by 2.5% a year ago.
Maintaining this breakneck pace of growth is not impossible, but would require domestic improvements which fuel investments into the country.
Meanwhile, the World Bank said “Achieving higher than 7 percent annual growth on a sustained basis will inevitably require increased productivity growth as well as much higher female labor force participation.”
While Bangladesh strives to grow even quicker by improving at home, it is also making efforts to make its external environment more attractive to business. Let’s look at this aspect in the next article.