Introduction
With
the economy growing annually over 6%, living standards rising for most
people and the country maintaining stability throughout 2015, Bangladesh
has in recent times been dubbed a development role model having
produced consistent progress in economic, social and human development
indicators.
In continuation of the profound
transformation the county has undergone since the Awami League led
government assumed office for the second straight term in January 2014,
the nation has been elevated to the lower middle income status in 2015.
Remarkable progress has been achieved
for having decreased unemployment and poverty, as well as developing a
pluralistic healthcare, extending electricity coverage, enduring quality
education for all, revamping infrastructure and stepping up the
country's digitization aspirations. Moreover, the country emerged as the
developing world’s biggest success stories in attaining most of the
Millennium Development Goals (MDGs) and has set new lessons for the
world in achieving the recently adopted Sustainable Development Goals
(SDGs).
The architect of this surprising model
of development is Honourable Prime minister Sheikh Hasina who has set
the blueprint with her charter of change “Vision 2021”, the manifesto
envisaged and declared by her party before the ninth national
parliamentary election. By breaking with orthodox models for progress,
HPM Sheikh Hasina, since then, has been helping to forge a new
Bangladesh centered on building a middle income nation by the 50th
anniversary of our independence and a developed nation by 2041.
Buoyed by this momentum of growth, an
overwhelming majority of Bangladeshis appear content to have HPM Sheikh
Hasina in charge. A poll released by Nielsen-Bangladesh in last
December, echoing previous surveys, gave her an impressive 67% approval
rate with equal measure of support for the Awami League led government.
On top of that, another survey, commissioned jointly by, British
Council, ActionAid Bangladesh and the University of Liberal Arts
Bangladesh (ULAB), revealed in last September that, 75% youths see the
country as a more prosperous nation in the next 15 years under the Awami
League government.
In a series of special reports, we will
highlight the activities and achievements which took place in an array
of sectors in 2015. The second of our twelve special reports looks at
the milestone achievements and state of key macroeconomic indicators in
the last year.
Budget Allocation and Implementation
The size of the national development
budget has marked almost a threefold rise comparing to that of 2006.
Last year, the budgetary allocation for national development stood at
$12.34 billion, up from a mere amount worth $3.1 billion just even a
decade back. But that road had never been so easy to achieve. It was
between 2001 and 2008 when misrule and corruption unleashed by the BNP
led alliance had spawned an epidemic of poverty and hunger. Those
memories no longer haunt the nation. In 2015, an amount worth $4.77
billion, up from $1.46 billion in 2005, has been extended as budgetary
allocation for making social safety initiatives ever more inclusive,
which accounts for 12.72% of the national budget.
To fight the curse of poverty, an
initiative “Employment for Ultra-Poor”, introduced by the present
government, has generated an 80 day employment scheme for around 5.4
million people over the last six years. Last year, as many as 8,80,000
people received the fruition of that programme, resulting in the country
witnessing the highest rise in rice equivalent wage. With a twofold
increase in last six years, the value of that scale soared to 8kg last
year from 5 kg in 2005. In a space of a decade, the rate of poverty
decreased by 18%, coming to 22.4% from 40%. Moreover, according to the
latest Hunger and Nutrition Commitment Index, Bangladesh ranked second
in South Asia to lead the table for lifting people from the clutches of
hunger. The report, published for third consecutive year, puts
Bangladesh in the 14th position among 45 developing countries, up from
20th in 2014.
Graduation to Lower Middle Income StatusBangladesh’s
graduation, forty four years after its independence, to the lower
middle income status, appeared as one of the biggest occasions for
national
exuberance
last year. The country has joined an upgraded league where 51 out of
215 countries of the world are placed. The Gross National Income per
capita (GNI) hit an all time high at $1,314 which was $1,154 even three
years ago. This GNI was higher than the Washington-based lender's set
threshold. The rise in per capita income makes Bangladesh the 58th
largest economy in the world in terms of nominal value. On the scale of
purchasing power parity, the per capita income in the country is $3,019,
making the economy the 33rd largest in the world.
According to World Bank and IMF,
Bangladesh has emerged in 2015 as the world’s 44th largest economy in
terms of the Gross Domestic Product (GDP), advancing 11 notches from the
previous year. In 2015, the value of GDP per capita went up at $1,235
which was only $514 ten years back. Last year, the country’s GDP grew at
6.51%, up from 5.1% in 2009. Breaking all records of the past, the
country managed to maintain 6.18% growth over the last six consecutive
years. Another country rating by the Organization for Economic
Cooperation and Development (OECD) stated that Bangladesh has
outperformed all the South Asian countries expect India, and moved up to
category 5 from 4. Moreover, World Economic Forum put Bangladesh two
notches up in last year's Global Competitiveness Index due to the
progress in the areas of macro-economy, health, education and
infrastructure.
Forex Reserves and Remittance Inflow
Country’s
foreign exchange reserve has registered a whopping 27 times increase in
15 years. In 2001, the country had to defer its payments to the Asian
Clearing Union (ACU) for imports to avoid compromising the $1 billion
foreign exchange reserve as that would undermine its global image. But
last year, the reserve hit all time high at $27 .4 billion for the third
time. The reserves were enough to cover the country's imports for
approximately eight months. Lower import of raw materials due to
improved backward linkages, and less import of food for better local
production also helped cut import bills to boost the forex reserves.
Throughout 2005, the earning from remittance stood at $4.8 billion. And
during the first half of this fiscal year, expatriates sent an amount
worth $7.45 billion as the manpower export marking a 30% rise. According
to the Bureau of Manpower, Employment and Training, around 4,20,000 men
and 76,0007 women migrated to different countries in the last twelve
months for overseas employment.
Inflation
The
beginning of the year saw inflation continue its downward trend, coming
down to 6.11% - the lowest in 25 months. Inflation fell to its lowest
level in 10 months in November, coming down to 6.05% from 6.19% a month
back. As of November last, food inflation fell 17 basis points from
October to 5.72% and non-food inflation 11 basis points to 6.56%.
Seventh Five Year Plan: 8% Growth by 2020
Centered
on the theme “Accelerating Growth, Empowering Citizens”, this plan,
approved, in October last, envisages taking the GDP growth rate at a
whopping 8% by 2020. Under the plan, the average growth rate is
projected at 7.4% over the said period and the flagship plan seeks to
raise the GDP growth rate progressively from 6.5% in FY2015 to 8% by
FY2020. Target has been set to create 12.9 million additional jobs ,
including 2 million jobs abroad for migrant workers. Moreover, works are
underway, in accordance with the plan, to reduce poverty rate from
22.4% to 18.6% and extreme poverty to around 8.9% by 2020.
People's Wealth Trebled
According
to a research published in October 2015 by the international financial
service organization, Credit Suisse, Bangladeshis have their amount of
economic wealth increased by threefold in the space of last 15 years,
while that of adult citizens has doubled. Country's adult population was
70.2 million in 2000, which grew to 100.7 million by mid-2015.
Correspondingly, the said group commanded a wealth worth $237 billion in
2015, up from 78 billion, with the per capita wealth of that populace
increasing from $1,069 to $2,201. In between this period, the amount of
economic wealth has risen from $441 to $795, and the quantum of
immovable wealth from $652 to $1,470.
New Strategy by Central Bank
After
achieving 94% of the targets set in the first paper illustrating work
plan for four years till 2014, the Central Bank proceeded with a new
five year strategy aiming to achieve inclusive growth and price
stability, fortify supervision and push for sustainable development.
Launched in September last, the paper has 14 goals while some 105
objectives, 310 action plans and 395 key performance indicators have
been fixed to achieve the strategic goals.
The areas this plan has prioritized are:
balanced and coordinated monetary policy; supervision and regulation
for ensuring financial stability, and optimization of human capital.
Financing has been increased in the agriculture, SME and environmentally
significant sectors. People got the chance to open bank account at TK
10, and sharecroppers got credit. Besides, it has taken into
consideration the sustainable, eco-friendly and inclusive economic
growth, capacity building of the financial sector to withstand shocks
and keeping active financial intermediation process.
Inclusive Banking Vindicated
Bangladesh
Bank Governor Atiur Rahman has been named the best central bank
governor in the Asian region by London-based publication Emerging
Markets for earmarking far reaching initiatives that successfully upheld
macroeconomic stability and expanded financial inclusion in Bangladesh.
Leaving India behind, Bangladesh won the
‘Child and Youth Finance International' Country Award 2015 for the
central bank’s school banking scheme and other activities including the
financial inclusion of children. Students in Bangladesh can open bank
accounts with just $1.2 as deposit, with no other charges applying. More
than 900,000 accounts by children exist, with total deposits amounting
to $90 million.
Inclusive Economy
According
to a study revealed, last year, by Institute of Microfinance (InM), a
microcredit think-tank, four in five households in Bangladesh have
access to financial services. Access to financial services, including
insurance, stood at over 79% in 2014, compared to 77% in 2010. It
further shows, over 40% of households in rural regions can access formal
financial services, which was 32.8% four years ago. Access to formal
financial services by poor households that are constrained by service
charges, collateral and a lack of financial literacy, stood at 24.19% in
2014, up from 19.53% in 2010. In 2014, 47% of households were able to
access microfinance, which was 43.23% about four years back. Rapid
improvement in the networks of banks and microfinance institutions as
well as a booming mobile banking segment contributed largely to this
attainment.
Decline in Dependence Ratio
The
number of people dependent on others for livelihood has dropped by 8%
over the last five years thanks to their increasing participation in the
economy, according to a survey conducted and published by the
Bangladesh Bureau of Statistics (BBS). The national dependency ratio
stood at 58% in 2013, down from 66% in 2009. A nearly equal number of
people were employed in jobs in rural and urban areas during the period.
The number of economic units stood at 8.75 million in 2013, up 118%
from the previous edition of the survey published in 2009.
Expansion in Middle Income Group
In
another survey, Bangladesh Institute of Development Studies found that,
20% of the population belongs to the middle-income category, up from a
9% in 1991. A person belongs to the middle-class category when his/her
income ranges between $2 and $3 per day. The findings show, at the
present growth rate, one-fourth, or 25%, of the total population will
belong to the middle-class income category by 2025 and 33% will be
elevated to that status by 2030. Moreover, the unemployment rate marked a
dramatic decline to 17.8% in 2013, which was 24.5% in 2006.
Economic Units Doubled
The
number of economic units has doubled between 2003 and 2013 riding on
the fast expanding non-farm activities across Bangladesh, according to
the government's latest census released last year. In 2003, the number
of economic units was 3.7 million which swelled to 7.8 million in 2013,
according to the Economic Census of 2013 that was released last year.
The economic units have increased 71% since 1986, when the first
economic census in the country took place.
Economic units went up 62.61% to 2.3
million in the last decade, while those in the urban areas rose 71.48%
to 5.5 million in 2013. Households with economic units also increased
over the period from 9,00,023 in 2003 to 2.8 million in 2013. The number
of female-headed households increased five times since 2003 to more
than half a million in 2013. The number of permanent establishments rose
50% to 4.5 million in 2013 from 2.9 million a decade ago, showing that
the base of the economy is getting stronger.
Global Perception
The
WB and ADB both have revised upward the growth forecasts for
Bangladesh, projecting that the economy would grow to 6.7% in this
fiscal year. Expressing wonder at the country’s growth, WB’s Chief
Economist Kaushik Basu pinned hopes that a target of 8% growth rate is
even achievable for the people in this land. Additionally, according to a
recent survey by HSBC, Bangladesh has topped the global confidence
trade index gaining 131 points among 25 countries including the likes of
USA, China and India, emerging as the best investment destination for
global businesses and having potentials to witness a rising and growing
economic outlook for the next six months.
Moreover, both Standard and Poor and
Fitch Ratings, leading global credit rating agencies, forecasted that
the country’s economic outlook is rated to remain in a stronger state
for the second consecutive year. Stable real GDP growth and persistently
strong foreign-currency earnings have earned the country “BB” ceiling.
