Key Drivers of Bangladesh Success Story Opportunities and Challenges under China+1 Geo-Polynomics
In Historical Context
Bangladesh emerged in 1971 as the world’s ninth poorest nation with a poverty rate of over 75%, GDP of USD 7 billion, per capita income of USD 90, infant mortality at 210 per 1000 births, and an average life expectancy of 46 years. Today, Bangladesh is the 35th largest economy in the world by GDP size (25th in PPP USD), GNI per capita of USD 2765 (current USD), and where infant mortality declined to 23 and life expectancy rose up to 72. The country has also gained international recognition as a model for poverty reduction which is down to 19%. Categorised by the United Nations as a Least Developed Country (LDC) since 1975, it has achieved the lower middle-income status in 2015 and today it is the largest graduating (LDC), with graduation scheduled for 2026.
From a ‘Test case of development’, Bangladesh is now being described as a ‘success story of development’. What brought this about and is it sustainable?
The Present Context
Tectonic shifts are now taking place in the world order. No country is an island in this global village. These shifts are consequential for Bangladesh, its economy and its people.
The strong recovery out of the COVID-19 episode has been interrupted by challenges emerging from the Russo-Ukraine conflict. Bangladesh is facing macroeconomic strains – both internal and external – and policymakers are trying hard to grapple with the situation. Elections are closing in so economic decisions are willy-nilly being influenced by political developments. An IMF program is on. But with USD 80 billion of foreign exchange earnings from exports and remittances, supplemented by ODA of about USDS 10 billion and FDI of another USD 4-5 billion, the prospective import bill of about USD 80 billion in the coming year appears manageable and should relieve the stress on the BOP and foreign exchange reserves provided the exchange rate remains flexible, as promised. Containing domestic inflation running at 10% plus is being curbed via monetary contraction and expenditure restraint, following standard prescriptions. Some fundamental reforms in the banking sector and revenue mobilisation have become absolutely critical. We need to wait until after the elections in January to see if the economy resumes its growth trajectory consistent with its potential.