Bangladesh is on track to post its quickest growth on record this year. According to the Bangladesh Bureau of Statistics (BBS), the country’s economic output will grow by 7.24% in fiscal year 2016-17.
The country’s fiscal year begins in July and ends in June of the succeeding year, and these estimates are based on data for the ten months until April.
The country’s strong economic growth is also helping it tackle poverty. In a report, the World Bank had noted that in 1991, over 40% of the country’s population were living in extreme poverty. That number is now down to less than 14%.
Other economic performance metrics have been impressive as well.
An official from Bangladesh Bank – the country’s central bank – recently cited data showing that the country’s forex reserves crossed the $33 billion mark in June – the first time in history. According to media reports, this provides enough in the way of resources for the country to pay its import bills for the coming nine months.
However, there are a few challenges as well which can potentially slowdown economic growth.
Remittances are a crucial part of the country’s economy and they have slowed down recently. Inward remittances dove by 14.2% in the first 11 months of financial year 2016-17 from a year ago. The primary reason for the decline is the fall in remittances from the Gulf Cooperation Council (GCC) as the region commands the lion’s share of inward remittances to Bangladesh.
At the same time, exports are declining as well. Export growth until April of the current fiscal year was 4%, down sharply from 9% in the same period a year ago.
When speaking about Bangladesh’s exports, the readymade garment (RMG) industry has to be a part of the discussion. The industry attracts a great deal of foreign investment and behind agriculture, is the biggest employer with over three million people engaged in garment production.
The infrastructure bottlenecks and problems being faced by the RMG industry are holding the country on a number of levels. Let’s look at these issues in the next article.