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Saturday, 28 November 2020

Economy of Bangladesh

  



The economy of Bangladesh is a middle income developing and stable economy. The economy features include the madhyamaharera annual growth rate , diffuse poverty , income distribution inequality , the labor force the unemployment , fuel , food and capital goods for the import dependence, national savings nimbahera, aid in decreasing the dependence and the agricultural sector contraction, with the service sector is growing fast. Independence in 1971Bangladesh's economy has made significant progress since its inception. The garment industry in Bangladesh is one of the largest in the world.   Until 1970, Bangladesh's economy was largely dependent on jute and jute products.   At that time, the country earned most of its foreign exchange by exporting jute . But with the advent of polypropylene products, the popularity and trade of jute products began to decline from the 1960s. 


Bangladesh's per capita gross domestic product  achieved a maximum growth of 56% in the 1960s, shortly after independence. However, this growth did not last long. The rate was 29% in the 1980s and 24% in the 1990s.  


Bangladesh's economy is 39th in the world and 29th in terms of purchasing power parity (PPP) which is 2nd in South Asia. Bangladesh has achieved a growth rate of gross domestic product (GDP) at an average rate of 7.3 percent over the past decade and is currently the 7th fastest growing economy in the world. In terms of purchasing power parity (PPP), Bangladesh currently has a per capita GDP of  4,600. According to the World Bank's 2019 data, the total workforce of Bangladesh is 6,00,09,353. 


In 2019, the GDP of Bangladesh was 316.465 billion US dollars which is estimated to be 80.918 billion US dollars in 2020.  


In 2016 and 2019, the GDP growth rate was 7% and 7.9% respectively. The probability rates in 2020 and 2021 will be 2% and 9.5% respectively. 


Bangladesh's GDP growth comes mainly from 5 sectors (manufacturing, wholesale and retail trade, transportation, construction and agriculture) and in the last financial year (2018-19) these sectors contributed 6 percent (Tk 7.5 trillion) to the GDP. According to the Bangladesh Bureau of Statistics (BBS), Bangladesh's GDP grew by 7.15% in the last fiscal, at a fixed price of Tk 11,05,893 crore.  


In recent years , Bangladesh has been achieving higher GDP growth from the 'services' and 'industrial' sectors of agriculture . According to the data of 2016, the GDP of Bangladesh in 'services', 'industry' and agriculture sector is 52.11 respectively; 33.6 and 14.23%.  


At present, 'foreign income' (remittance) and 'ready-made garment industry' (garments) are one of the driving forces of Bangladesh's economy. Although Bangladesh earns the highest amount of foreign exchange from the readymade garment industry (exports), at the same time due to the cost of purchasing its raw materials from abroad, the remittance sector alone is one of the sources of foreign exchange earnings in Bangladesh. Again, due to the fact that Bangladesh imports more than it exports, the deficit in the foreign exchange reserves of Bangladesh Bank is mainly met by using remittance currency. Bangladesh mainly increases their foreign exchange reserves (Bangladesh Bank's reserves) through 'expatriate income' (remittances). According to the 2016 census, Bangladesh ranks 9th among the countries in the world in terms of remittances.  


In 2019, remittances to Bangladesh came to 1 lakh 55 thousand 73 crore 35 lakh taka ( US  1,633 crore ) which is 20 percent more than in 2016. In 2016, 2017, 2017 and 2015, remittances came to US  1,553, 1,353, 1,361 and 1,531 crore respectively.  


Bangladesh receives a large amount of remittances before these every year and since 2020, the government has been providing incentives at the rate of 2% (Tk 2 per 100) on remittances sent by expatriates.  


The garment sector accounts for 18% of Bangladesh's total GDP, accounting for 63% of Bangladesh's total exports last year (Rs 3,000 crore).  


In 2019, Bangladesh was the 42nd largest exporter in the world in terms of export earnings. In 2016, Bangladesh's share in the global garment market was 6 percent and it was the second largest country in the world in terms of garment exports. In 2019, the contribution of the goods and services export sector to the GDP of Bangladesh was 14.6%.   According to the United States-based organization Green Building Council, Bangladesh has six of the world's top 10 high-quality (environmentally friendly) factories in the ready-made garment industry.  


According to the Bangladesh Economic Survey 2019, the total labor force of Bangladesh engaged in agriculture is 40.7%. According to the Bangladesh Bureau of Statistics, 47.61 percent of households in Bangladesh are dependent on agriculture.  


Agriculture and forestry account for more than 10 percent of Bangladesh's GDP, amounting to Rs 1,07,000 crore. In the last financial year, 75,000 crore has been added to the economy of Bangladesh through crop production, 15,000 crore through cattle rearing and 18,000 crore through afforestation.  


Bangladesh has achieved food self-sufficiency despite the curse of overpopulation . The main reason for this is that the domestic production has increased a lot. At present Bangladesh ranks third in the world in terms of paddy production. Cultivated land in Bangladesh is generally used for paddy and jute cultivation, but wheat cultivation has increased in recent times .   Bangladesh is fairly self-sufficient in terms of rice production. Nevertheless, 10% to 15% of the total population is at risk of malnutrition.   Agriculture in Bangladesh is largely an uncertain monsoon cycleAnd overly dependent on regular floods and droughts . The country 's development is being hampered due to improper development of communication , transport and power sectors . Bangladesh has huge natural gas mines and small mines of coal , mineral oil etc. Although the industrial infrastructure of Bangladesh is weak, the number of skilled workers is plentiful and the wages are cheap.


Other industries include the pharmaceutical industry,  the shipbreaking industry,  information technology,   the leather industry, the steel industry, the lighting industry,  


Since independence in 1971, Bangladesh has received more than  3 trillion or  30 billion in foreign aid and loans from various donor countries, of which  15 trillion has been spent.  Bangladesh's main donors include the World Bank , the Asian Development Bank , the United Nations Development Program , the United States , Japan , Saudi Arabia and Western Europe.States. In Bangladesh, historically a huge trade, this reserve is constantly increasing for the welfare of the workers working abroad. In 2017, the value of these reserves increased to about 3 trillion or 30 billion US dollars, which is the 40th largest reserves in the world.


Bangladesh is currently the 41st country in the economy and the fifth fastest growing country.



Macroeconomic trends 

This is a list of total domestic production according to the market price of Bangladesh published by the International Monetary Fund which is calculated in Millions of Bangladeshi Taka currency .


Year

Gross Domestic Product (Million Taka)

US Dollar Exchange

Inflation Index

(2000=100)

Per Capita Income

(as % of USA)

1980

250,300

16.10 Taka

20

1.79

1985

597,318

31.00 Taka

36

1.19

1990

1,054,234

35.79 Taka

58

1.16

1995

1,594,210

40.27 Taka

78

1.12

2000

2,453,160

52.14 Taka

100

0.97

2005

3,913,334

63.92 Taka

126

0.95

2008

5,003,438

68.65 Taka

147


2015

17,295,665

78.15 Taka.

196

2.48

2019

26,604,164

84.55 Taka.


2.91


The following table shows the main economic indicators in 1980–2019. Inflation below 5% is in green.



Economic sectors


Sectoral Shares of Gross Domestic Product (GDP) of Bangladesh

2015-16

2016-17

2017-18

2018-19

A) Agriculture

14.77

14.17

13.82

13.32

Agriculture and forestry

11.55

10.98

10.68

10.25

Crops & horticulture

8.15

7.69

7.48

7.12

Animal Farmings

2.01

1.93

1.86

1.79

Forest and related services

1.39

1.37

1.34

1.35

Fishing

3.22

3.19

3.14

3.07

B) Industry

28.77

29.32

30.17

31.15

Mining and quarrying

1.73

1.83

1.83

1.82

Natural gas and crude petroleum

0.65

0.64

0.62

0.58

Other mining & coal

1.08

1.18

1.2

1.24

Manufacturing

17.91

18.28

18.99

19.89

Large & medium scale

14.58

14.93

15.63

16.37

Small scale

3.34

3.35

3.36

3.52

Electricity, gas and water supply

1.45

1.4

1.38

1.33

Electricity

1.12

1.09

1.07

1.04

Gas

0.26

0.24

0.24

0.22

Water

0.07

0.07

0.07

0.07

Construction

7.67

7.81

7.98

8.12

C) Service

56.46

56.5

56

55.53

Wholesale and retail trade; repair of

motor vehicles, motorcycles and personal and household goods

13.01

13.05

13.15

13.34

Hotel and restaurants

1.04

1.03

1.04

1.04

Transport, storage & communication

10.27

10

9.61

9.34

Land transport

7.76

7.64

7.38

7.22

Water transport

0.62

0.59

0.55

0.51

Air transport

0.08

0.07

0.07

0.07

Support transport services, storage

0.49

0.47

0.46

0.44

Post and Tele communications

1.32

1.24

1.16

1.1

Financial intermediations

3.86

3.91

3.93

3.89

Monetary intermediation (banks)

3.27

3.34

3.37

3.35

Insurance

0.38

0.36

0.34

0.34

Other financial auxiliaries

0.21

0.21

0.22

0.21

Real estate, renting and business activities

7.51

7.73

7.82

7.87

Public administration and defence

4.05

4.19

4.24

4.09

Education

2.82

3.04

3.03

3.02

Health and social works

2.11

2.08

2.07

2.15

Community, social and personal services

11.79

11.46

11.11

10.78

Percentage of sectoral shares of GDP of Bangladesh 




Agriculture 


 

According to the World Bank, agriculture is still the source of income for 8% of rural people in Bangladesh. Two-thirds of rural households depend on both agricultural and non-agricultural incomes, and even among urban dwellers, 11 percent are directly involved in agriculture. According to the 2013 Bangladesh Labor Force Survey, 45.6 percent of the total labor force in Bangladesh is engaged in agriculture.  


According to the data of the Ministry of Agriculture till January 2020, Bangladesh is ranked 3rd, 4th and 8th in the world in vegetable, paddy and potato production respectively. It also ranks 4th in fish, 7th in mango, 8th in guava and 10th in food grain production in the world. The contribution of agriculture to the gross domestic product (GDP) of Bangladesh is 16.6%. Bangladesh's 'Agricultural Mechanization Policy 2019' provides interest-free loans for the purchase of agricultural machinery and the 'National Agricultural Extension Policy 2019' is in the process of finalization. In addition, 'Small Irrigation Policy', 'Organic Agriculture Policy' and 'Important Persons in Agriculture Policy 2019' have been formulated for the betterment of agriculture. Also 'National Agricultural Policy' and 'Deltaplan: 2100' have been prepared. The government has set up a total of 499 'Agricultural Information and Communication Centers' for farmers. (AICC). To mechanize agriculture in Bangladesh, the government subsidizes the purchase of agricultural machinery at the rate of 60 percent for farmers in the haor and southern coastal areas and 50 percent for other areas.  


Most Bangladeshis make their living through agriculture .  Although rice and jute are already well-known as the main crops of Bangladesh, the importance of wheat cultivation has increased recently. Tea in the NortheastIs produced. Due to the fertile land of Bangladesh and the availability of easily available water sources, paddy is harvested three times a year in many parts of the country. Due to many regulators, manual labor-intensive agriculture in Bangladesh is slowly improving. Despite the adverse weather conditions, Bangladesh is now self-sufficient in food grain production. Recently, flood control, irrigation management, moderate use of fertilizers and proper capital management have been introduced in the rural economy. As a result further improvement is expected. In 1999, the main crop of paddy in Bangladesh was 200,000.2 million metric tons. In 2003, more than 13,000 tons of various pesticides such as granular carbofuran, synthetic pyrethroids and malathion were sold for paddy cultivation at the national level.  The increase in pesticide use has not only polluted the environment, but has also increased the cost of farming for poor rice farmers.Bangladesh Rice Research Institute is working with various non-governmental organizations to reduce the use of pesticides.   In contrast to rice, wheat production was 1.9 million metric tons in 1999 . Due to population growth, the pressure on arable land is increasing. That is why the fertility of the land is constantly decreasing. That is why there is a food crisis. To address this crisis we have to rely on foreign aid and commercial food imports. Unemployment is still a terrible problem and it is a matter of concern whether agriculture can provide employment to all these unemployed people. Providing alternative employment is a major responsibility of future governments. Livestock is another major source of income for the people of agricultural Bangladesh. This sector is improving very fast.


Industry 

Some local companies like Beximco , Square , Akij Group , Ispahani , Navana Group , Transcom Group , Habib Group , KDS Group and multipurpose companies Unocal Corporation and Chevron .


Ready-made garment industry


The readymade garment industry is one of the major contributors to the economic development of Bangladesh and is playing an important role in the country's development. 7-8% of the total growth comes from the garment sector. This industry of Bangladesh is currently being imitated by the developing countries including the developed world. The garment industry is the only medium among the industries that have shaped our economy since independence. Through this industry, they are able to show their hard work and production skills in the world.


Clothing industry history 

Although people have been using one type of cloth since ancient times, in fact the use of cloth made with the help of sewing machines first started in 1855. From there it can be said that it started to be used in Bangladesh much later. The journey of the garment industry in Bangladesh started in 1970. And Riaz Garments was his guide. In 1960, he started a small tailoring factory called Riaz Store in Urdu Road, Dhaka. Since then, Riaz Garments has been supplying clothes to the local market. In 1983, the factory was renamed as Messrs. Riaz Garments Limited. Riaz Garments exported 10,000 boys' shirts worth 13 million francs in 1986 to a Paris-based firm in France. And this was the first direct export of garments from Bangladesh. Then on 26th December 1986, the first establishment of Bangladesh (current public administration) Secretary Mohammad Nurul Quader Khan Desh Garments Limited was established. Does. In 1989, Desh Garments Limited established its first non-equity firm with the support of Daegu Corporation of South Korea. As a result, technical and marketing cooperation was established between Desh Garments and Daewoo Corporation of South Korea. Workers and later inspectors were trained in South Korea to make them suitable for working on machines. These trainees started production in 1970. Desh Garments Limited was the first 100% export oriented company. In 1980, another Korean corporation called Yangon set up its first garment factory in a joint venture with another company called Bangladeshi Trexim Limited. Bangladeshi partners own 51% of the equity in the new company Yangon's Bangladesh. Trexim Limited exported padded and non-padded jackets from Bangladesh to Sweden in December 1970. In this case, the responsibility of marketing was taken by the foreign partners. As a garment manufacturer and garment exporter, Bangladesh actually entered the world market in 1971-72 by exporting readymade garments worth Tk 0.1 billion. At that time the garment industry did not play a significant role in the economy of Bangladesh. However, in just 10 years, Bangladesh's garment exports rose to US 1445 million in 1992-93. From then on, Bangladesh did not have to look back. The amount of garment export is increasing day by day. While the total garment exports in FY 2011-12 were US  19,089.83 million, it increased to US  21,515.83 million in FY 2012-13 and 9,853 million in FY 2013-14. 25 million Along with the increase in export earnings, the number of garment factories in Bangladesh is also increasing day by day. At present there are over 5000 garment factories in Bangladesh. From which a lot of clothes are being produced. After the 90's, the inclusion of women made the industry more dynamic.


Poverty 

With a population of 160 million, Bangladesh is one of the most densely populated countries in the world. According to the World Bank, Bangladesh's extreme poverty rate dropped to 12.9 percent in 2016. World Bank President Jim Young Kim praised Bangladesh's key development in poverty alleviation, which has come down from 44.2 percent in 1991 to 16.5 percent in 2010. Bangladesh is making unimaginable progress in reducing its poverty rate, and according to the World Bank, Bangladesh has great potential to alleviate extreme poverty by 2030.  

 Poverty is a multidimensional problem in Bangladesh. It has gripped this country for many years.


Poverty rate in Bangladesh 2019: Poverty rate is 20.5 and poverty rate is 10.5.


Export sector 

Post-independence Bangladesh's export earnings in 1972-73 were only 348.33 million US dollars; The lion's share (90%) used to export jute and jute products Among the other major export products of the time was tea industry and leather industry Over the next four decades, Bangladesh's export earnings increased and the ready-made garment industry was the main sector behind the current situation. Other potential export sectors are pharmaceutical industry and shipbuilding industry.







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