Economic and Political Overview

flag Bangladesh 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

 

Economic Indicators

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 3.5% and 4.6% in 2020 and 2021 despite the international effect of the COVID-19 pandemic. It is forecasted to pick up to 6.5% in 2022 and 7.2% in 2023, according to the updated IMF forecasts from October 2021. 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 2022.

The general government gross debt remained relatively low in 2020 and 2021 - at 38.9% and 39.9% 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 increase to 41% in 2022 and remain stable in 2022. 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 2020 and 2021, and is expected to remain stable in 2022 (5.7%) and in 2023 (5.8%) despite the COVID-19 pandemic. Current account deficit was estimated to have narrowed to -1.1% of GDP in 2021 and was forecasted to reach -1.5% in 2022 and -1.9% in 2023. 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 2022, the country’s most immediate challenge remains the economic, social and public health impacts of the COVID-19 pandemic. The official unemployment rate according to the latest survey was 4.2% in 2019, 4.1% in 2020 and 6% in 2021 (Trading Economics, 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 147th 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 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 302.40323.06e355.69390.61429.42
GDP (Constant Prices, Annual % Change) 8.23.5e4.66.57.2
GDP per Capita (USD) 1,8551,962e2,1392,3272,534
General Government Gross Debt (in % of GDP) 35.738.939.941.041.0
Inflation Rate (%) 5.55.6e5.66.06.2
Current Account (billions USD) -5.10-4.72-3.81-5.84-8.26
Current Account (in % of GDP) -1.7-1.5e-1.1-1.5-1.9

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Main Sectors of Industry

The Bangladeshi economy relies on its enormous human resources, rich agricultural soils and abundant water resources. Agriculture represented 12.9% of GDP and employed 38% of the total workforce in 2021 (World Bank, 2022). 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 29.5% of GDP and employed 22% of the total workforce in 2021 (World Bank, 2022). 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 53.4% of GDP and employed 40% of the total workforce in 2021 (World Bank, 2022). Microfinance and computing are among the largest sectors, with the country's technology exports reaching around USD 1 billion per year. The government aims to increase technology exports to USD 5 billion by 2021.

 
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) 12.6 28.8 54.6
Value Added (Annual % Change) 3.0 1.3 3.4

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Bangladesh Taka (BDT) - Average Annual Exchange Rate For 1 MUR 2.212.332.462.372.15

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

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.

Score:
56,5/100
World Rank:
120
Regional Rank:
25

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

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.

Score:
5.02/10
World Rank:
71/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Trade represented 30.5% of Bangladeshi GDP in 2020 (World Bank, 2022). 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, the United States and China. 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). The country export mainly to the USA (20% of all exports), Germany (15%) and the UK (11%).

In 2020, exports of goods from Bangladesh decreased to 33.6 billion USD (from 39.3 billion the previous year) and imports of goods were reduced to 52.8 billion USD (from 59.1 billion in 2019). Since becoming independent, Bangladesh has had a negative trade balance, with its deficit being financed by international aid and expatriate transfers. WTO estimated the 2020 trade balance to be -18.47 billion USD. With regards to services, the imports for 2020 were 8 billion USD, while the exports were 3.4 billion USD, leading to an overall trade balance of -18.4 billion USD. According to data from the Central Bank of Bangladesh, the country's trade deficit widened by 5.4% on the year in the first half of 2019-20 fiscal year (running from July 2019 to June 2020) to USD 8.22 billion. In the wake of a surge in import payments against lower exports earnings, Bangladesh's trade deficit escalated 160% in the July to October 2021 period: the trade deficit totalled 9.09 billion USD in contrast to 3.49 billion USD 12 months before (Bangladesh Bank, December 2021).

 
Foreign Trade Indicators 20162017201820192020
Imports of Goods (million USD) 41,49052,83660,49559,09452,804
Exports of Goods (million USD) 34,95635,85139,25239,33733,605
Imports of Services (million USD) 8,5199,0119,2729,3348,049
Exports of Services (million USD) 3,5852,2622,9733,1783,451
Imports of Goods and Services (Annual % Change) -7.12.927.0-2.0-10.5
Exports of Goods and Services (Annual % Change) 2.2-2.38.110.9-16.2
Imports of Goods and Services (in % of GDP) 21.320.323.421.418.6
Exports of Goods and Services (in % of GDP) 16.615.014.815.312.2
Trade Balance (million USD) -6,244-12,966-17,284-15,929-16,382
Trade Balance (Including Service) (million USD) -10,505-17,594-21,457-19,273-18,479
Foreign Trade (in % of GDP) 38.035.338.236.830.8

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 
 
 
 
 

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Main Services

5.0 bn USD of services exported in 2018
42.53%
17.52%
13.13%
7.38%
7.09%
5.70%
4.06%
2.23%
0.33%
0.03%
0.01%
10.7 bn USD of services imported in 2018
77.13%
6.92%
6.74%
3.45%
2.90%
1.43%
0.54%
0.39%
0.37%
0.12%
0.02%

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Ministry of Finance
Statistical Office
Bangladesh Bureau of Statistics
Central Bank
Bangladesh Bank
Stock Exchange
Dhaka Stock Exchange
Chittagong Stock Exchange
Search Engines
Ethikana
Economic Portals
Bangladesh Economy

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Political Outline

Current Political Leaders
President: Abdul Hamid (since 24 April 2013)
Prime minister: Sheikh Hasina (since 6 January 2009)
Next Election Dates
Presidential: 2023
House of the Nation: December 2023
Main Political Parties
The main political parties are :

- 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)

Type of State
Democratic Parliamentary Republic.
Executive Power
The Head of State, the President of the Republic, is elected for a 5-year term by the Parliament. The President of Bangladesh has a representative role as the Prime Minister holds most executive powers. The latter is appointed by the President and must be a member of the majority party in the parliament. The government is composed of ministers selected by the Prime Minister.
Legislative Power
Legislative power is vested in a unicameral parliament called the House of Nations or Jatiya Sangsad. Its 350 members are elected by direct universal suffrage for a five-year term.
 

Indicator of Freedom of the Press

Definition:

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.).

World Rank:
152/180

Source: World Press Freedom Index, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

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.

Ranking:
Partly Free
Political Freedom:
5/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID19 disease in Bangladesh, please visit the Bangladeshi government platform with the official data. Official information on the progress of the epidemic in Bangladesh is consolidated by the Directorate General of Health Services. The agency provides a daily epidemiological update, which includes key national figures.

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures
To find out about the latest public health situation in Bangladesh and the current sanitary measures in vigour, please consult the Bangladeshi Directorate General of Health Services (the website is in Bengali, but the publications are in English) including the up-to-date information on the containment measures put in place and public health recommendations.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the portal of the the Bangladeshi Customs.

For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Bangladesh on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan
For the information on the economic recovery scheme put in place by the Bangladeshi government to address the impact of the COVID19 pandemic on the Banagladeshi economy, please visit the website of the Bangladeshi Ministry of Finance. The information on the Bangladesh economic emergency plan is available here.

For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and  macroeconomic) taken by the Bangladeshi government to limit the socio-economic impact of the COVID-19 pandemic,  please consult the section dedicated to Bangladesh in the IMF’s Policy Tracker platform.

Support plan for businesses
For the information on the local business support scheme established by the Bangladeshi government to help small and  medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity, please consult  the portal of the Bangladeshi Ministry of Finance and the Central Bank of Bangladesh.

For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters
To find out about the support plan for exporters put in place by the Bangladeshi government, please consult the latest publications available on the Bangladeshi Export Promotion Bureau website.
 

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Latest Update: July 2022