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
Bangladesh recorded one of the fastest growth rates in the world in the past few years, with stable economic performance that has helped to reduce poverty and social inequalities. However, the Bangladesh economy has faced numerous shocks, including disruptions stemming from Russia's conflict in Ukraine and global monetary tightening, which have disrupted a robust post-pandemic rebound, leading to a slowdown in real GDP growth to 6% in FY23, from 7.1% one year earlier. Projected to persist at 6% in FY24 and accelerate to 6.6% the following year, real GDP growth relies on relatively resilient exports, despite subdued private demand (IMF).
The fiscal stance is expected to maintain neutrality, with a fiscal deficit of 4.6% of GDP in FY24, which remains largely unchanged from FY23. The current account deficit is anticipated to remain compressed at around ¾% of GDP in FY24, while improvements are expected in the financial account, including timely repatriation of export proceeds. Foreign exchange reserves are forecasted to gradually increase in the near term and are projected to cover about four months of prospective imports in the medium term. Nonetheless, uncertainties surrounding the outlook remain significant, with risks leaning towards the downside. The IMF estimated the country’s debt-to-GDP ratio at 39.4% in 2023, up from 37.9% one year earlier, with a stable outlook over the forecast horizon (39.9% in 2025).
Headline inflation hit a decade high at 9.9% year-on-year in August 2023, averaging 9% throughout the year. Inflation is expected to ease to 7¼ percent year-on-year by the end of FY24, although the moderation will be gradual due to heightened inflation expectations. 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.
Bangladesh's unemployment rate was estimated at 4.3% in 2022 by the World Bank (latest data available). However, the informal sector is a very significant area of the economy and employment in Bangladesh, particularly for the less skilled people. 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. According to government data, the poverty rate in the country has been reduced from 41.5% in 2006 to 18.7% in 2022, and extreme poverty has gone from 25.1% to 5.6%.
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 460.20 | 446.35 | 455.16 | 491.82 | 546.92 |
| GDP (Constant Prices, Annual % Change) | 7.1 | 6.0 | 5.7 | 6.6 | 7.1 |
| GDP per Capita (USD) | 2,731 | 2,621 | 2,646 | 2,831 | 3,118 |
| General Government Gross Debt (in % of GDP) | 37.9 | 39.8 | 41.4 | 41.8 | 42.4 |
| Inflation Rate (%) | 6.2 | 9.0 | 9.3 | 6.1 | 5.7 |
| Current Account (billions USD) | -18.64 | -3.33 | -3.68 | -13.44 | -16.50 |
| Current Account (in % of GDP) | -4.1 | -0.7 | -0.8 | -2.7 | -3.0 |
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 represents 11.2% of GDP and employs 37% of the total workforce (World Bank, latest data available). 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. Jute, once the country's primary export crop, remains a significant contributor to the economy, although its importance has diminished over time. According to the Bangladesh Bureau of Statistics (BBS), the growth in the agriculture sector for the fiscal year 2022-23 slowed to 2.61%, down from 3.05% in the previous fiscal year.
Industry represents 33.9% of GDP and employs 22% of the total workforce (World Bank). The textile and garment industry is the cornerstone of Bangladesh's industrial economy, contributing significantly to export earnings and providing employment to millions of people, particularly women, across the country. The pharmaceutical sector has also witnessed notable growth, with Bangladesh emerging as a key player in the global generic drug market. Light manufacturing industries such as electronics, footwear, and plastics are gaining momentum, fueled by favorable government policies and increasing foreign investment. Data from the BBS show that the industrial sector registered a drop in production from 9.86% to 8.18% in FY2022-23. According to BBS calculations, production in the manufacturing sector fell by 2.18% to 9.23%.
Services account for 51% of GDP and employ 41% of the total workforce (World Bank). Key sectors include telecommunications, banking and finance, transportation, and the burgeoning IT sector. Telecommunications has experienced remarkable growth, with widespread mobile phone penetration and increasing internet connectivity transforming communication networks across the country. The IT sector is emerging as a promising area, with a growing number of companies engaging in software development, outsourcing, and IT-enabled services.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 37.1 | 21.7 | 41.2 |
| Value Added (in % of GDP) | 11.2 | 33.9 | 51.0 |
| Value Added (Annual % Change) | 3.1 | 9.9 | 6.3 |
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 represents only 34% of Bangladeshi GDP (World Bank, latest data available). According to government data, ready-made garments comprise the majority of exports, followed by jute, shrimps and prawns, and footwear; whereas imports are led by Iron & steel, edible oil, fertilizers, and petroleum products.
The country's main export partners are the U.S. (19.8%), Germany (14.4%), the UK (9.1%), Spain (6%), and France (5.1%). Imports come chiefly from China (21.3%), India (17%), Singapore (8%), Indonesia (5%), and Malaysia (3.9% - data NBS). The country acts as a passageway between the center 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, export processing zones, as well as high-level negotiations with key countries. Bangladesh has benefited from more simplified procedures and regulations to export its products to the European Union as an LDC (least developed country).
Since becoming independent, Bangladesh has had a negative trade balance, with its deficit being financed by international aid and expatriate transfers. In 2022, exports of goods from Bangladesh increased to USD 54.7 billion (from 44.2 billion the previous year) and imports of goods increased to USD 88.2 billion (from 80.4 billion in 2021 – data WTO). With regards to services, the imports for 2022 were USD 12.1 billion, while the exports were USD 8.2 billion. The World Bank estimated the country’s trade deficit at 8% of its GDP (from 6.4% one year earlier). In the first half of the 2023-24 fiscal year (July 2023-June 2024), Bangladesh's total exports increased by 0.84% year on year to USD 27.54 billion, as per the latest official data. Meanwhile, imports fell by 18.19% year on year to USD 33.68 billion during the same period.
| Foreign Trade Indicators | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 59,094 | 52,804 | 80,448 | 88,234 | 66,863 |
| Exports of Goods (million USD) | 39,337 | 33,605 | 44,223 | 54,695 | 55,788 |
| Imports of Services (million USD) | 9,558 | 7,927 | 10,866 | 12,190 | 10,713 |
| Exports of Services (million USD) | 6,214 | 6,020 | 7,475 | 8,234 | 6,095 |
| Imports of Goods and Services (Annual % Change) | 0.5 | -11.4 | 15.3 | 31.2 | n/a |
| Exports of Goods and Services (Annual % Change) | 11.5 | -17.5 | 9.2 | 29.4 | n/a |
| Imports of Goods and Services (in % of GDP) | 18.5 | 15.8 | 17.1 | 20.9 | n/a |
| Exports of Goods and Services (in % of GDP) | 13.1 | 10.4 | 10.7 | 12.9 | n/a |
| Trade Balance (million USD) | -15,929 | -16,394 | -32,617 | -29,792 | n/a |
| Trade Balance (Including Service) (million USD) | -19,273 | -18,300 | -36,008 | -33,677 | n/a |
| Foreign Trade (in % of GDP) | 31.6 | 26.3 | 27.7 | 33.8 | n/a |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
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| 5.9 bn USD of services exported in 2023 | |
|---|---|
| 31.80% | |
| 19.60% | |
| 13.08% | |
| 12.42% | |
| 10.77% | |
| 7.68% | |
| Personal travelPersonal travel | 7.66% |
| OtherOther | 79.25% |
| Business travelBusiness travel | 0.02% |
| 3.09% | |
| 0.88% | |
| 0.66% | |
| 0.04% | |
| 11.0 bn USD of services imported in 2023 | |
|---|---|
| 61.28% | |
| 15.32% | |
| Personal travelPersonal travel | 14.92% |
| OtherOther | 23.40% |
| Business travelBusiness travel | 0.39% |
| 7.96% | |
| 6.82% | |
| 3.76% | |
| 2.64% | |
| 1.23% | |
| 0.42% | |
| 0.37% | |
| 0.19% | |
Source: United Nations Statistics Division, Latest Available Data
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: October 2024
