ECN202

Assignment
Topic:
Macroeconomic
Overview of
Bangladesh

Course: Principles of Macroeconomics, Course Code: ECN202

Section: 07, Summer’2021

Submission date: August 25, 2021

Submitted to

Khwaja Saifur Rahman

Lecturer A (Equivalent to Senior Lecturer)
School of Business and Entrepreneurship (SBE)
Independent University, Bangladesh (IUB)

Submitted by

Mohona Islam
ID: 1731523

Economic overview of Bangladesh

Bangladesh is one of the emerging countries of the world. Bangladesh has become the
developing country from underdeveloped country. it was a tough job for Bangladesh because it is
a small country with hugely populated. The overall size of Bangladesh is 1,47,570 square
kilometres and the population is about 20 crores. At the beginning when Bangladesh got
recognition as a separate country the condition of Bangladesh was not so good. But with the hard
work by the people of Bangladesh has to this situation now where it is. In 2019 the GDP growth
rate is remarkable in recent times. Because of the covid-19 situation growing on many obstacle
has come in the way of development. Bangladesh has earned a solid place in the world and
become the role model for those countries those are still under develop. When Bangladesh got its
independence all the developing countries were neglecting the country because it was not so
wealthy and developed. But now they proved the capability in front of the world. By the time of
1980 Bangladesh was started to grow their economy and suddenly they stumbled in the way
because of the crisis situation in 1980. After some time, Bangladesh again turned back and
turned back strongly. But after that the whole scenario has totally changes for Bangladesh. From
then they earned a huge success in the GDP sector. The lowest GDP growth the country faced
was attest 5 percent every year. After 2003 Bangladesh archived a great trade deficit which
helped the country to maintain a healthy foreign reserve. For the last 11 years Bangladesh is on
the go to archive the success. Through this time the mostly surprising sector was the RMG sector
of Bangladesh. It has pushed the whole sector and helped the overall GDP to maintain a healthy
rate. In present Bangladesh is maintaining the close to 6% growth rate in 2018. It was about 8%
but because of the covid-19 situation the whole world faced a great crisis and because of that the
whole scenario of the world has changed a lot[ CITATION wor20 \l 1033 ].

Economic overview of Indonesia

Indonesia is one of the largest economy of the south Asian region. Indonesia is more agricultural
based country. About 34% people of the country is living on the agricultural sector and about
21% people working in the industrialist sector. Before the 1997 economic crisis the country was
growing at its best and they were the 22 nd largest growing country of the word. But after the
economic crisis the overall growth rate has gone down. The country starts again growing from
the year 1999 and never looked back. After that they were in the top 20 largest economy of the
world. in last 10 years the Indonesian economy has accelerated hugely. They have the growth
rate over 5.7 % per year. But in 2016 they had slightly lower growth rate of 4.9 %. From the year
2017 to 2021 the Indonesian GDP has achieved five point 7% growth rate on average and
achieved the trillion-dollar economy club. Indonesia is considered as a middle class country of
the world. About 40% of the economic growth comes from the foreign exchange investment on
the industrialized section. The government of Indonesia plays a very important role to control the
economy of the country because the government controls the fluctuation of the basic need
product market. Now because of the covid-19 situation they are also facing some difficulties to
archive their regular growth. This pandemic has been a big problem for the whole world. Whole
world is facing a big crisis because of the pandemic. The main trade partners of the country are
china, Singapore and japan. And the majority of the trade was to be happened with china. But
because of the corona virus the whole china has been on the back foot for over a year. The
general flow has been stopped that is why Indonesia also facing many difficulties to archive their
average trade goal. Because their main trading sector has been stopped. On the other hand,
because of the covid-19 pandemic people cannot go out for work. Lockdown situation is existing
all over the world. As a result, the whole economical sector is facing a great crisis. At this very
moment if this situation cannot be taken under control it could turn the situation much worse
than this. Although somehow Indonesia has maintained to stay strong and because of the hard
work of the people live the country is still in a good position[ CITATION Nor20 \l 1033 ].
 GDP growth of Indonesia and Bangladesh
In the cart we can see the growth rate of both the countries Bangladesh and Indonesia. We have
chosen the FY09 to FY19 to evaluate the overall situation. Both the countries have many
similarities and dissimilarities from different aspects.

GDP Chart (%)

9

6
Bangladesh
5 Indonesia
4

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Here in the graph we can see that in FY9 the growth rate of Indonesia is 4.629% on the other
hand the country Bangladesh has 5.45% growth rate. But still there is a big difference in the size
and the trade numbers in these two countries. All according to our analysis we can see that
Bangladesh is in a good position in terms of maintain a good growth rate in terms of Indonesia.
Here Bangladesh is on the driving seat, also they have more stable financial condition then
Indonesia. Although both the country is hugely depending on the agricultural sector. The
measurement also shows that the people of Bangladesh has high standards of living then
Indonesian people. If this rate goes on Bangladesh will soon can archive the golden opportunity
to get into the developed country club. The average growth rate of Indonesia is around 5.00% on
the other hand Bangladesh is maintain a growth rate of over 7.00%. in recent times Bangladesh is
accelerating their growth rate at its best.
 Inflation of Bangladesh and Indonesia
The inflation rate indicates the purchasing power of a country. So the lower the inflation the
better position the country is in. Below the inflation chart of both the country Bangladesh and
Indonesia is given from the year FY9-FY19. Through this we can measure that which country is
in a better position

Infl ati on R ate %

Bangladesh Indonesia
25

20

15 15.26

7.47
8.28
10 3.75 4.97
5.44 3.98 2.44 4.29
3.82
5 1.61
7.14 7.86 8.17 7.17
6.76 5.67 5.87 6.73 6.28 5.6 4.46
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

In the chart we can see that the inflation rate of the country Indonesia faced high inflation in the
year FY9-FY11. But after that the inflation rate has gone down consistently and in the year FY16
that fallen hugely to 2.439% which is a really good sign for Indonesia. On the other hand,
Bangladesh has maintained a higher inflation rate from the beginning and somehow it has fallen
in the year FY19 which is a good sign for the economy of Bangladesh. As the ideal inflation rate
is 2% and Bangladesh has the lowest of 4.459% so the policy makers of the country must have to
ensure that the inflation rate is under control so that they growth of the country doesn’t face any
problems regarding the GDP growth. Also it has a negative impact in the economy if it goes
down a lot. In that case the money supply will increase and the rate of exchange will decrease.
Which has happened to the country Indonesia. The inflation rate has gone down to 1.606% in the
year FY19. Because of this the exchange rate has decreased of the country[ CITATION
Mac202 \l 1033 ].
 Unemployment rate in Bangladesh and Indonesia
The unemployment rate is one of the key element for a country in the way of development.
Because the lower the unemployment rate indicates a better performance in the long run.
Because when people has nothing to do they get depressed and it reduces the efficiency of a
country. In the below chart the unemployment rate of Bangladesh and Indonesia is given:

unemployment rate %
Bangladesh Indonesia
7

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

From the chart we can see that in the year between FY9 and FY12 the unemployment rate goes
lower at its best after that it starts to grow for Bangladesh. On the other hand, for Indonesia at the
year FY9 the unemployment rate was higher and they have managed it properly and take proper
steps like ensuring new work places for unemployed people and also the government has given
the opportunity to the unemployed people so that they can make their own employment through
entrepreneurship. Thus they have managed the unemployment rate to keep low. But for
Bangladesh the rate is fluctuating on the regular intervals. So Bangladesh government along with
the citizens of the country must have to take proper steps so that they can manage to keep the
unemployment rate lower and this will help them to manager their overall growth much
higher[ CITATION Mac203 \l 1033 ].