Bangladesh’s GDP to surpass that of Denmark, Singapore, Hong Kong by 2025

Isa Khan

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Bangladesh's economy is projected to reach $516.24 billion in the fiscal 2024-25, outperforming advanced economies such as Denmark, Singapore and Hong Kong along the way, says the International Monetary Fund (IMF).

Denmark is expected to have a GDP of $484.38 billion at the current dollar value in 2025, while Singapore and Hong Kong will see their economies reach $461.51 billion and $452.10 billion, respectively.

The forecast was revealed in the IMF's World Economic Outlook database on Tuesday.

Approaching a $500 billion+ economy, Bangladesh would also surpass Norway ($497.55 billion), the Philippines ($506.66 billion) and even the oil-rich United Arab Emirates ($480.03 billion) by 2025.

According to the Bangladesh Bureau of Statistics (BBS), Bangladesh's GDP was $355 billion in FY21, up from $323 billion in the previous fiscal year.

Meanwhile, the IMF forecasted 6.54% real GDP growth for Bangladesh in the current fiscal year, which is expected to reach 7.2% in FY25.

Dr Zahid Hussain, former lead economist of the World Bank's Dhaka office, told The Business Standard, "These comparisons would only hold significance if we consider the overall economy as a market."

He said, "But if we want to know the real impact of this achievement and assess what would change in terms of employment generation, poverty, economic inclusion and so on, it has to be done on a per capita basis."

He further said, "Unless the effect of this growth trickles down to the larger portion of the population, it would not be inclusive.

"Industries inclined towards technology and capital-intensive production may benefit, but whether firms with larger labour forces will be included in this achievement is questionable."

With a current population of nearly 17 crore, Bangladesh's GDP per capita is projected to hit $2,994.46 in 2025, while Norway and Denmark will have a much higher GDP per capita, at $89,679.84 and $81,950.18, respectively.

Singapore and Hong Kong's GDP per capita will reach $79,169.49 and $59,126.85, respectively.

South Asian economies in 2025

South Asia's largest economy, India is projected to have a GDP of $4,084.69 billion in 2025.

Bangladesh has been the second-largest economy in the region since 2019 and it will continue to hold that position till 2025.

But in terms of GDP per capita, Bangladesh has already overtaken India in 2020 and will keep its position to reach $2,994.46 in FY25, while India's per capita GDP is slated to grow to $2,829.65.

Meanwhile, Sri Lanka's GDP is expected to reach $101.44 billion in 2025, followed by Nepal ($45.83 billion), and Maldives ($7.03 billion).

Bhutan, on the other hand, would remain at the bottom with a GDP of $3.62 billion.


Bangladesh's per capita gross domestic product (GDP) will be US$2,138.794 in 2021 which is higher than the neighboring India, according to the International Monetary Fund (IMF).

The per capita GDP of India will be US$2,116.444 in 2021.

The projection came from the World Economic Outlook 2021 of the IMF titled "Recovery During a Pandemic Health Concerns, Supply Disruptions and Price Pressures", released on Tuesday.

The Washington-based multilateral lender also projected that Bangladesh's economic growth will be 6.5 per cent in the current year. The IMF trimmed the projection for global growth to 5.9 per cent for this year in contrast to its previous estimation of 6.0 per cent. It, however, kept unchanged the global growth at 4.9 per cent for the next year.

"The global recovery continues, but the momentum has weakened, hobbled by the pandemic," said the report.

Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions and further feeding inflation in
many countries, said the IMF.

"Overall, risks to economic prospects have increased and policy trade-offs have become more complex."

Partially offsetting those changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices.

If higher inflation becomes entrenched, it could force central banks to respond aggressively and higher interest rates would slow the recovery, the IMF cautioned.


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Bangladesh's economic growth will be led by government-run development projects in the current fiscal year as private sector credit growth still remains slow, according to top economists of Standard Chartered.

The private sector credit growth may rise in the coming months if the Covid situation remains under control and vaccination goes up to the mark, they said at a virtual event titled "Global Research Briefing (GRB) Bangladesh 2021 Media Session" on Thursday.

However, they said they are not confident enough that this growth will be notable before March-April of next year.

Saurav Anand, an economist of Standard Chartered for South Asia, said it is not only in Bangladesh, but the global scenario is also the same.

"Bangladesh's credit growth is 8.5%, while India's is closer to 6%. The private sector is resisting investment in terms of higher capacity building," he pointed out.

So, this year investments will be mostly driven by the government. Mega infrastructure projects from the government side are what will drive the investment part of economic growth, said Anand.

Private sector credit rose to 8.42% in August from 8.38% in July, according to the Bangladesh Bank. The July figure also improved by 0.40 percentage points from June although it was still 6.8 percentage points lower than the central bank's target.

The Bangladesh Bank in its monetary policy for the current fiscal year has set the target of private sector credit growth at 14.8%.

Anand further said, "There are so many projections, but I think if the Covid situation does not get worse, it will surely go to 7% plus growth in this fiscal year. So far, we see the country's economy stands at $350 billion and it will reach $500 billion by 2026."

Naser Ezaz Bijoy, chief executive officer at Standard Chartered Bangladesh, said, "As the vaccination drive continues, the economy is set to accelerate."

There are significant opportunities such as technology adoption and inclusiveness through mobile-based solutions and the ITeS [IT-enabled Services] sector, while growth-supportive policy focused sectors will continue to spur private investment and foreign direct investment."

Planning Minister MA Mannan said, "We remain as committed as ever in fostering a business-friendly climate so that we can continue our journey of inclusive progress and prosperity."

Eric Robertsen, global head of research and chief strategist of Standard Chartered, said pandemic-affected global export has almost returned to pre-pandemic level. "The speed of recovery has been much faster."

There are some significant risk factors, such as global debt deflation, associated with such a positive recovery in global trade, he said, adding, "In the global market, there are some inflationary problems with prices of crude oil, copper and natural gas rising."

Divya Devesh, head of Asa FX Research at Standard Chartered, said Taka is still best in the Asian market as Bangladesh is recovering from pandemic-induced economic downturn riding on high remittances, exports and reserves. So, Taka will outperform other Asian currencies in the coming days.

Bangladesh is on the path of returning to normalcy after a pandemic-hit period, with its exports having raked in $38.75 billion in FY21, the receipts amounted to $33.67 billion in FY20.

Recent studies show a ray of hope that the country can earn $22 billion more annually if liberal market access is utilised with diversified items.

On the other hand, remittance inflow dipped by 19.75% to $1.73 billion year-on-year in September, which was also the lowest in 16 months. Bangladeshi expatriates sent home $2.15 billion in September last year.

The amount remitted in September this year was 4.63% lower than the August earnings. In July-September of Fy22, total remittance inflow amounted to $5.40 billion, down from $6.71 billion during the same period last fiscal year.

The StanChart economists said recent Taka depreciation has been in line with their expectations.

They also said GDP growth will recover in FY22 on the back of domestic consumption and global growth rebound.

Stating that vaccination will continue to be a key driver, they said if vaccination continues at the current pace, StanChart expects a 70% vaccination threshold by June 2022.

The World Bank on Wednesday projected a 6.4% growth in the current fiscal year for Bangladesh. Meanwhile, growth for the next fiscal year was estimated at 6.9%, while StanChart economists forecasted that growth will sustain at over 7% during FY22-26, and per capita to $3,000 by FY26.

 

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The International Monetary Fund's (IMF) latest update on the World Economic Outlook database has put Bangladesh on the path to become a $500 billion economy by 2024-25. On its way, the nation is projected to outperform developed economies like Denmark, Norway, Singapore and Hong Kong.

While it may be presented as a great achievement, there is more to the story than what the naked eye sees.

Gross domestic product (GDP) is an important indicator of an economy. But it is not the be-all-and-end-all of economic indicators. There are more important economic indicators such as, per capita GDP as well as the Human Development Index which must be taken into account to get a more holistic picture of the economy.

To put it simply, GDP is the total monetary value of all the finished goods and services produced within a country's borders during a specific period, usually a year. The indicator was created by British economist John Maynard Keynes to assess Britain's wartime production. It was specifically designed to measure the production capabilities and growth in an economy. It is not and should not be regarded as an indicator of the economic prosperity and social well-being of a country's citizens.

To understand the effect of GDP on actual human lives, we can look at another indicator called GDP per capita or income per capita. This is derived by dividing a nation's GDP by its total population. It provides a rough estimate of how the GDP will be distributed among the people of a nation.

Bangladesh's current GDP per capita stands at $2,138 which is higher than India. But the countries Bangladesh is supposed to overcome, in terms of GDP, have and will continue to have a much higher per capita income than Bangladesh. For example, Denmark currently has a per capita GDP of $67,919 which will increase to $81,950 by 2025. Bangladesh's per capita income is also set to grow, but it will barely reach the $3,000 mark.

By contrast, Norwegians will enjoy a per capita income of $89,679 by 2025. Even Bhutan, the country which is set to have the lowest GDP among all south Asian countries will enjoy a higher per capita GDP of $4,626 at the same time.

Norway and Denmark have a population of 5,475,439 and 5,818,294 respectively. But even their combined population is almost 15 times smaller than the population of Bangladesh. As a result, even when Bangladesh will cross them in overall GDP, it will not be possible to cross them based on GDP per capita.

Bangladesh will also not be able to compete with these countries based on the standards of living. According to World Population Review, Denmark ranks first among all countries based on the quality of life while Norway is at 11th and Singapore is at 34th. Bangladesh, meanwhile, is in the 81st position.

Bangladesh also lags behind these countries when it comes to human development. According to the Human Development Index, published by the UN Development Programme, Norway ranks first in the world in human development while Hong Kong and Denmark rank fourth and 10th respectively. Singapore is close behind them at the 11th position.

Bangladesh, on the other hand, is in the 133rd position. While children in the aforesaid four countries enjoy, on average, 12.35 years of schooling, Bangladeshi children only get to enjoy 6.2 years. These countries also have higher per capita Gross National Income (GNI). Singapore, for example, has the per capita GNI of $88,155 while Bangladesh has $4,976.

Dr MM Akash, the chairman of the Department of Economics at the university of Dhaka believes these forecasts can be wrong. "If we just extend the linear graph without taking important factors into consideration," he said, "then this will just be a mechanical prediction. We have to take a more holistic approach when it comes to predicting economic growth".

His assessment certainly is true, especially for countries like Bangladesh. According to the World Bank, advanced economies will deviate from pre-pandemic projections by only -0.1% while low income countries like Bangladesh are expected to deviate by almost -5%.

If our current rate of growth is continued, Bangladesh perhaps will be able to achieve the milestone. But that will not mean a drastic improvement in people's lives. Dr Akash said, "We are currently experiencing jobless growth, where investments are being made in capital intensive sectors but a huge number of workers are struggling to find work. If capital is not invested efficiently to create more employment opportunities, common people will not be able to reap the rewards". It will be an imbalanced growth.

Our human resource does have the potential to create more economic prosperity in the future. But that will require a nurturing environment. "We have to ensure food security, quality public education and rule of law", explained Dr Akash. "Even though we have made strides in food security, the latter two are still not up to global standards. We have to provide education which will allow skilled addition to the labour force".

Reaching the $500 billion mark may appear as an accomplishment worth celebrating. But the main goal of the economy is to create welfare for the people. We have to ensure inclusivity and accountability which will allow everyone to benefit from the nation's burgeoning economy.

 

Nilgiri

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but doeas that mean that bengladesh will reach the same level of prosperity as the aforementioned nations .... the GDP is not the ultimate value in order to judge the dgree of wealth of a country and the well being of the citizens

Indeed, just look at south asia from space (city light wise), put in the political boundaries....and compare with China and then more industrial parts of world for reference.

It gives one quick example regionally.

Standardised non-govt involved references are important in the end to calibrate on standard of living as to what GDP means and is measured like in different countries.
 
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