Bangladesh: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Bangladesh recorded one of the fastest growth rates in the world in the past few years with a stable economic performance that has helped to reduce poverty and social inequalities. GDP growth reached 8.2% in 2019 and remained positive at 3.4% in 2020, 6.9% in 2021 and 7.2% in 2022 despite the international effect of the COVID-19 pandemic. It is forecasted to remain high at 6% in 2023 and 6.5% in 2024, according to the updated IMF forecasts from January 2023. The post-pandemic global economic recovery and the private consumption boosted by strong remittance flows from the Bangladeshi diaspora around the world are expected to be the key drivers of growth in 2023.
The general government gross debt remained relatively low in 2021 and 2022 - at 35.5% and 37.5% of GDP respectively - as a result of a tight fiscal policy. Nonetheless, the tax base is narrow owing to a number of exemptions, weighing on public revenue. Public debt ratio to GDP is consequently anticipated to remain at 37.2% in 2023 and 36.9% in 2024. A new VAT law was introduced at the start of the fiscal year 2019-20 in an attempt to increase tax income; however, its impact has been limited since the launch. Financial situation of the banking sector remains weak due to a large share of non-performing loans and an increase in restructured loans. Inflation moderated to 5.6% in 2021 and 6.2% in 2022, and is expected to increase to 9.1% in 2023 before coming down to 6.8% in 2024. Current account deficit was estimated to have narrowed to -1.1% of GDP in 2021 but reached 4.1% in 2022. It was forecasted to reach -3.8% in 2023 and -3.5% in 2024. Bangladesh is one of the most vulnerable countries in the world to climate change, with extreme weather events estimated to have caused a loss of around 1.8% of GDP in the past few decades. The country has taken measures to promote green financing and is seeking grants from the international community, notably via the Green Climate Fund.
In 2023, the country’s most immediate challenge remains the economic, social and public health impacts of the COVID-19 pandemic as well as the impact of geopolitical events. According to a International Labour Organization (ILO) report, Bangladesh's unemployment rate would remain at 4.8% in 2023, down from the projected 5% in 2022, but this more than doubles to over 10% for the youth unemployment rate. More importantly, 29.8% of young people in Bangladesh, including over 47% for young women, were not involved in education, employment or training in 2020. Other social issues include constant social strikes, terrorist threats, limited access to capital by the population, and disputes over Teesta River water distribution with India. Climate change also poses a serious threat to Bangladesh. Transparency International ranks Bangladesh as 146th out of 180 countries in its Corruption Perceptions Index 2021, stable compare to a year earlier.
Fiscal risks include weak domestic revenue growth (if tax reforms are delayed) and higher COVID-19-related expenditure. In the financial sector, contingent liabilities from non-performing loans combined with weak capital buffers could necessitate recapitalizations of state owned banks and depress credit growth. External risks remain elevated. While demand for RMGs appears to be stabilising, the recovery is fragile. Demand for Bangladesh’s overseas workforce in the Persian Gulf region may also be impacted by the ongoing recession in that region, impairing future remittance inflows (World Bank, 2022).
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 373.90 | 416.27 | 460.20 | 420.52 | 469.35 |
| GDP (Constant Prices, Annual % Change) | 3.4 | 6.9 | 7.1 | 5.5 | 6.5 |
| GDP per Capita (USD) | 2,270 | 2,498 | 2,731 | 2,470 | 2,728 |
| General Government Gross Debt (in % of GDP) | 34.5 | 35.6 | 39.1 | 42.1 | 42.4 |
| Inflation Rate (%) | 5.6 | 5.6 | 6.2 | 8.6 | 6.5 |
| Current Account (billions USD) | -5.44 | -4.58 | -18.69 | -9.01 | -19.49 |
| Current Account (in % of GDP) | -1.5 | -1.1 | -4.1 | -2.1 | -4.2 |
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
The Bangladeshi economy relies on its enormous human resources, rich agricultural soils and abundant water resources. Agriculture represented 11.6% of GDP and employed 38% of the total workforce in 2022 (World Bank, 2023). Main crops include rice, tea, jute, wheat, sugarcane, tobacco, spices, and fruits. Bangladesh is the world's fourth biggest rice producer, although shortages caused by natural disasters occasionally force the country to import rice.
Industry represented 33.3% of GDP and employed 21% of the total workforce in 2022 (World Bank, 2023). Textile is by far the largest industry, accounting for more than 80% of the country's total exports. Secondary industries include paper, leather, fertilisers, metals, and pharmaceuticals.
Services accounted for 51.3% of GDP and employed 40% of the total workforce in 2022 (World Bank, 2023). Microfinance and computing are among the largest sectors, with the country's technology exports reaching around USD 1 billion per year.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 38.3 | 21.3 | 40.4 |
| Value Added (in % of GDP) | 11.6 | 33.3 | 51.3 |
| Value Added (Annual % Change) | 3.2 | 10.3 | 5.7 |
Source: World Bank - Latest available data.
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| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Bangladesh Taka (BDT) - Average Annual Exchange Rate For 1 MUR | 2.21 | 2.33 | 2.46 | 2.37 | 2.15 |
Source: World Bank - Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Trade represented 28% of Bangladeshi GDP in 2021 (World Bank, 2023). The main export products are clothes, raw jute and its derived products, leather, fish and frozen seafood. Bangladesh mainly imports machinery and equipment, chemical products, steel & metals, cement, food and oil derived products (OEC).
The country's main export partners are the European Union, including Germany at 15% of all exports), the United States (20%), the United Kingdom (11%) and China (2.3%). Bangladesh imports mainly from China (22% of all imports) , India (13%) , Singapore (9.5%) and Hong Kong with 5.6%. The country acts as a passageway between the centre of India and its Eastern provinces. Customs duties in Bangladesh are relatively high; however, the country is implementing a series of measures to reduce its trade barriers, including concessional tariffs, a customs duty recovery system and export processing zones as well as high-level negotiation with key countries. The country has benefited from more simplified procedures and regulations to exports its products to the European Union as an LDC (least developed country).
In 2021, exports of goods from Bangladesh increased to 44.22 billion USD (from 33.60 billion the previous year) and imports of goods increased to 80.44 billion USD (from 52.80 billion in 2020). Since becoming independent, Bangladesh has had a negative trade balance, with its deficit being financed by international aid and expatriate transfers. WTO estimated the 2021 trade balance to be -35.91 billion USD from -18.47 billion USD in 2020. With regards to services, the imports for 2021 were 10.87 billion USD, while the exports were 7.47 billion USD, leading to an overall trade balance of -32.52 billion USD.
| Foreign Trade Indicators | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 52,836 | 60,495 | 59,094 | 52,804 | 80,448 |
| Exports of Goods (million USD) | 35,851 | 39,252 | 39,337 | 33,605 | 44,223 |
| Imports of Services (million USD) | 9,011 | 9,272 | 9,334 | 8,049 | 10,872 |
| Exports of Services (million USD) | 2,262 | 2,973 | 3,178 | 3,451 | 7,478 |
| Imports of Goods and Services (Annual % Change) | 5.2 | 23.9 | 0.5 | -11.4 | 15.3 |
| Exports of Goods and Services (Annual % Change) | -1.8 | 6.1 | 11.5 | -17.5 | 9.2 |
| Imports of Goods and Services (in % of GDP) | 17.2 | 19.8 | 18.5 | 15.8 | 17.1 |
| Exports of Goods and Services (in % of GDP) | 12.8 | 12.7 | 13.1 | 10.4 | 10.7 |
| Trade Balance (million USD) | -12,966 | -17,284 | -15,929 | -16,394 | -32,522 |
| Trade Balance (Including Service) (million USD) | -17,594 | -21,457 | -19,273 | -18,300 | -35,917 |
| Foreign Trade (in % of GDP) | 30.0 | 32.5 | 31.6 | 26.3 | 27.7 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
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Source: United Nations Statistics Division, Latest Available Data
- Awami League (AL): governing party, centre to centre-left;
- Workers Party of Bangladesh: left-wing to far-left, communism, marxism-leninism;
- Jatiya Party: centre-right to right-wing;
- Bangladesh Nationalist Party (BNP): right-wing, national and social conservatism, economic liberalism.
Other minor parties are:
-Jatiya Samajtantrik Dal (JSD)
-Bangladesh Tarikat Federation (BTF)
-Bangladesh Jamaat-e-Islami (JIB)
-Liberal Democratic Party (LDP)
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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Latest Update: September 2023
