Why Is the IMF Upbeat about Bangladesh’s Repositioning in the World Economy?

0
216

The global economy has experienced significant fluctuations in recent years. The COVID-19 pandemic and the Ukraine war ensued in close succession, resulting in significant impacts. The global situation was characterised by disorder and disintegration. However, in the midst of these circumstances, there exists a glimmer of optimism. The worldwide economic system is experiencing a gradual recuperation, and prospects appear optimistic. The Chinese economy, which has been reopened, is experiencing a robust rebound, while the supply chain disruptions that were caused by the war are being resolved. The significant implementation of contractionary monetary measures by the majority of central banks is yielding positive results, as inflation is gradually converging towards the desired targets.

According to the International Monetary Fund’s forecast, the worldwide economic expansion is anticipated to reach a low point of 2.8 percent in the current year, followed by a slight increase to 3 percent in the subsequent year. However, the process of recuperation is not devoid of obstacles. Global economic growth is being impeded by a number of factors including high levels of uncertainty, unregulated wage prices, monetary tightening, and financial instability.

Notwithstanding the challenges faced, Bangladesh has attained a commendable position in the international economic landscape. The nation’s economy is performing proficiently and exhibits the capacity to surpass all limitations. According to the International Monetary Fund’s forecast, Bangladesh is expected to make a greater contribution to global economic growth in the period spanning from 2023 to 2028, compared to the European nations of France and the United Kingdom. This represents a noteworthy accomplishment for a nation that was previously regarded as among the most impoverished globally. Bangladesh has demonstrated that through perseverance and diligent effort, remarkable progress can be achieved.

Prediction  

 

As per the World Economic Outlook 2023 report by the International Monetary Fund, it is projected that Bangladesh will contribute 1.6% towards the overall global gross domestic product growth until the year 2028. The aforementioned figure surpasses that of the United Kingdom and France, both of which are projected to make a 1.5% contribution to the worldwide economic expansion. The rapid progress and notable achievements in economic growth and development of Bangladesh are noteworthy.

IMF’s projection for the upcoming five-year period presents certain obstacles, as the worldwide economy is anticipated to expand by a mere 3% following the onset of elevated interest rates. Nevertheless, the fact that Bangladesh holds a prominent position as a major contributor to worldwide economic expansion cannot be disregarded. Among the 20 nations projected to contribute to 75% of global growth, Bangladesh has emerged as a prominent participant.

The current occasion is a source of immense national pride for Bangladesh and serves as a poignant reminder that through unwavering resolve and diligent effort, any goal can be attained. China, India, the United States, and Indonesia are projected to be the foremost contributors to worldwide economic expansion. However, it is imperative to acknowledge Bangladesh’s noteworthy position within the top ten contributors. The aforementioned statement is indicative of the nation’s commitment towards augmenting productivity and circumventing economic disintegration caused by geopolitical tensions.

 

The rationale for making a prediction

Bangladesh has achieved noteworthy economic progress in the fifty years since its inception on March 26, 1971. The nation has adopted a rapid expansion approach, resulting in its recognition as a “tiger economy” and a “Frontier Five” economy by the global community.

Over the past few years, Bangladesh has effectively rebounded from the impact of the worldwide pandemic and its corresponding economic ramifications. Amidst the pandemic, the government’s measures of providing stimulative packages worth 11.9 billion, maintaining a consistent production of RMG goods, and receiving substantial remittances played a pivotal role in rescuing the economy.

Conversely, amidst the Ukraine conflict in the previous year, Bangladesh sustained consistent progress and advancement. The growth of remittance income, investments, and large-scale infrastructure projects such as the Padma Bridge and Metrorail are contributing to the significant advancement of the country’s connectivity domain, positioning it favourably for future progress in the years to come.

Furthermore, Bangladesh has effectively harnessed its demographic dividend by leveraging its economy through remittances and the production of ready-made garments. Ranked eighth among the leading remittance earners globally, this country is the sixth-largest exporter of human resources, having earned $22 billion in remittances in 2022. The economy of the nation, which is focused on exports, has demonstrated significant growth, with a recorded value of $44.39 billion in 2021, indicating a 13.68% rise from the previous year.

Moreover, it is noteworthy that the aforementioned rate exhibited a persistent upward trend, coinciding with a 7.01% rise in export earnings during the July-October period of FY23, which amounted to $16.85 billion, as compared to $15.75 billion recorded during the corresponding period of FY22. Significantly, the Ready-Made Garment (RMG) exports of Bangladesh have been pioneering. In the fiscal year 2021-2022, Bangladesh exported garments valued at US $42.613 billion.

The Gross Domestic Product (GDP) size exhibited an increase to $470.22 billion during the fiscal year 2022, in comparison to the previous year’s $416.26 billion. Conversely, it can be observed that the per capita income of Bangladesh experienced a 9% increase on a year-on-year basis, reaching a value of $2,824 in the fiscal year of 2021-22. Moreover, Bangladesh is presently in the process of graduating from its status as a least-developed country, with an anticipated completion date of 2026, after which it is expected to transition into a developing country.

Despite any potential challenges, it is projected that Bangladesh’s economic market will ascend to the 9th position by 2030, with the overall economy anticipated to attain a value of $1 trillion by 2040. This suggests that the IMF’s forecast is not merely speculative, but rather a tangible actuality. Lastly, the stable political atmosphere and cautious governance in Bangladesh, coupled with a development-oriented approach, are widely regarded as the primary factors responsible for the country’s economic prosperity and its prominent role as a major contributor to the global economy.

Conclusively, the noteworthy expansion of Bangladesh amidst economic adversities triggered by the COVID-19 pandemic and the Ukraine conflict is indicative of the nation’s perseverance and industriousness. Consequently, Bangladesh has emerged as a prominent contributor to worldwide economic expansion, outpacing significant Asian rivals. The nation’s emphasis on enhancing productivity and fostering progress has yielded positive results, and it is poised to sustain this trajectory through appropriate policies and resolute efforts. The attainment of this accomplishment is a source of gratification for the citizens of Bangladesh, who have exerted unwavering efforts towards the development of their nation’s economy.

 

Nevertheless, it serves as an exemplary illustration of the achievable outcomes through persistent effort and resolute perseverance. In light of ongoing global economic challenges, the triumphs of Bangladesh serve as a source of inspiration and motivation for other nations to emulate. In general, Bangladesh appears to have a promising outlook for the future, and through sustained endeavours, it can uphold its robust standing in the international economy.

 

– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

Read Full Briefs as a Pdf [Link]