Bangladesh is among selected least developed countries (LDCs) where the pace of gross domestic product (GDP) growth accelerated, poverty dropped sharply and inequality fell since 2000. Prudent macroeconomic management, characterized by low fiscal deficit, contained inflation, balance of payments (BoP) surpluses, and a very comfortable reserve position served as the solid foundation for the continued strong growth.
Average growth of 6.0% since 2005 has been sustained, notwithstanding global recession, political disturbances, commodity price shocks and natural disasters. Manufacturing sector has been the largest single contributor to growth. Its share in GDP has risen from 10% in 1980 to 18% in 2015.
Growth has been broad-based with demographic dividend resulting in population growth reduction and human development improvement. Net new jobs of 13.8 million has been added during the period, 2003 - 2013, with women's employment up by 7.0 million (to 16.8 million in 2013).
BANGLADESH AT A CROSSROADS: Bangladesh aims to become higher-middle-income ($4126 - $12735 in constant 2015 prices) and high income (over $12735 in 2015 prices) by 2041. To reach the 2041 targeted income level, Bangladesh's per capita income needs to grow by at least 13% per annum in dollar terms, compared with the targeted Seventh Five Year Plan growth rate of 8.0% in dollar terms.
The task will be extremely challenging in view of the fact that, over the last three decades, the average annual per capita GDP of China, world's best performing economy, grew by 11.5%. Realization of 7th Plan objectives will be the first critical step in that direction.
Realization of the 7th Five Year Plan Targets: The major objective is to spur growth to 8.0% and reach investment level of 34% by fiscal year (FY)20. Private investment is expected to reach 26.6% of GDP from the current level of 22% of GDP. Foreign direct investment (FDI) is expected to reach 3.0% of GDP ($9.9 billion) from 1% ($1.7 billion) in FY15.
Export target is expected to rise from $31 billion to $54 billion in FY20, which is in line with the targeted doubling of exports by 2021. Share of manufacturing in GDP is expected to grow further to 25%.
STATE OF INVESTMENT IS A MATTER OF CONCERN: Despite the government's planned objective to move to a higher growth trajectory (up to 8.0%) under the Sixth Five Year Plan (FY11-15), Bangladesh's growth performance remained range bound at more than 6.0% level, primarily because it experienced only a modest increase in gross domestic investment. Between FY06 and FY14, gross investment has only risen from 26% to 28.7% of GDP, mostly from public investment (from 4.5% to 6.9% of GDP).
Private investment, accounting for 77% of total investment, will be vital to growth but remained stagnant in relation to GDP at 20%-22% of GDP.
HIGH COST OF TRADE: It takes 28 days to export (costing $1281) and 33 days to import (costing $1515), in contrast to six and four days respectively, for the best performers.
The key drivers of investment are:
* Connectivity and logistics
* Regional and global integration
* An efficient and financially strong financial system
* Access to serviced land for setting up industries