Professional Documents
Culture Documents
Overall Macroeconomics Condition of Bangladesh
Overall Macroeconomics Condition of Bangladesh
~Charles Babbage
DEPARTMENT OF
MARKETING
UNIVERSITY OF DHAKA
A Term Paper on
Overall Macroeconomics Condition of Bangladesh
Course Title: Macroeconomic (MKT-121)
Prepared for:
Jeeta Majumdar
(Assistant Professor)
Department of Marketing
University of Dhaka
Prepared by
Md.Tanvir Rana
Roll:50
Section :C
...............................................
Signature
To be completed by the Instructor
Marks Obtained
Signature of Instructor
Jeeta Majumdar
Assistant Professor , Dhaka University
Department of Marketing
Sir,
With due respect, I want to say that it is our pleasure to get the chance to prepare and submit this
report to you. As assigned, I try to analyze Overall Macroeconomics condition of Bangladesh
and ask the people about the task. As I was working on this report, I got the opportunity to learn
a lot about the Macroeconomics condition of Bangladesh.
Thank you for assigning me to work on such a report. I express my gratitude for your valuable
guidance and instructions to complete this report, helping me to acquire great knowledge.
Sincerely,
____________________
Md.Tanvir Rana
Roll:50
Section: C
Department of Marketing
INTRODUCTION
The People's Republic of Bangladesh, with a land size of 147,600 square kilometers, is situated
in the northeastern region of the South Asian Subcontinent in the delt formed by the Alluvial
Ganges and Brahmaputra rivers. It is a crucial location connecting China, India, and the three
major economies in the ASEAN region. It borders India on the east, west, and north, Myanmar
on the southeast, and the Bay of Bengal on the south. It is the most densely inhabited country in
the world, with a population of roughly 163 million. There are more than 20 ethnic minorities
and 98% of the population is Bangladeshi. Muslims make up 86.6% of the population and Islam
is the official religion. One of the ancient peoples of the world is Bengali. One of the indigenous
peoples of the South Asian continent is the Bengali. It had developed into the most densely
populated, economically advanced, and culturally prosperous region of the subcontinent by the
16th century. In the middle of the 18th century, it evolved into the focal point of British colonial
rule in India. In the latter half of the 19th century, it was made a province of the British Empire.
Pakistan received Bangladesh in 1947. On January 10, 1972, the People's Republic of
Bangladesh became a legal entity. The government launched economic reforms in the late 1970s
and early 1980s with the goal of changing an agriculture-only, inward-looking economy into a
multi-industry, export-focused one. The government of Bangladesh has accelerated market-
oriented and liberalized reforms in recent years, as well as the country's integration into
globalization, active improvement of the investment environment, establishment of export
processing zones to draw in foreign investment, and promotion of industrialization and
urbanization. Bangladesh has made significant progress in reducing poverty and growing its
economy. Since 2005, the GDP growth rate has consistently exceeded 6%. This paper mainly
analyzes the macroeconomic development of Bangladesh in recent years from the aspects of
economic growth, unemployment rate, price level, import and export trade, foreign investment
and international balance of payments
1.Economic Growth:
The economy of Bangladesh has expnded quickly in recent years. Table 1 shows that
Bangladesh's total GDP rises over time, rising by an average of $23.43 billion year, from $133.4
billion in 2012 to $274 billion in 2018. Although GDP per capita is still relatively low, it has
been increasing gradually every year since 2012, rising from $883.1 to $1,698.30 in 2018[3].
Every year since 2016, in particular, the yearly growth rate has been above 7, reaching 7.86% in
2018. The GDP growth rate has consistently exceeded 6%. According to a prediction from the
International Monetary Fund (IMF), Bangladesh's economy would grow at a 7.8% annual rate in
2019, placing it third in the world. Strong exports and remittance income from Bangladesh are to
accept responsibility for the rapid growth rate.
Economic Growth (GDP, annual variation in %) 6.6 7.1 7.3 7.9 8.2
Inflation Rate (CPI, annual variation in %, eop) 6.1 5.0 5.8 5.3 5.7
Inflation Rate (CPI, annual variation in %) 6.2 5.5 5.7 5.5 5.6
Current Account Balance (USD bn) 3.5 4.3 -1.3 -9.6 -5.3
2.Unemployment Rate:
Bangladesh's unemployment rate held steady at 4.2% from 2014 to 2018. At 4.1%, the
unemployment rate was at its lowest ever[5]. In 2014, 2016 and 2017, the unemployment rate
was 4.2%; in 2018, it increased to 4.3%. (As shown in chart 1). The Asia-Pacific region's highest
youth unemployment rate is in Bangladesh. Youth unemployment
increased by 6.4% between 2010 and 2017, the highest rate among asia-pacific nations,
according to the International Labour Organization's (ILO) 2018 asia-pacific country
employment and social outlook report. Pakistan (5.3%) and Vietnam (3.7%) were next in line.
3.Interest Rate:
Balancing the upside potentials and the risks the policy stances- repo and reverse repo rates were
kept unchanged at 6.75 percent and 4.75 percent respectively in FY2016-17. The rate of
Treasury bills (91-days, 182-days and 364-days) decreased approximately by 1.0-1.5 percentage
points in June 2017compared to July 2016. The weighted average interbank call money rate
remained within 3.5-4.0 percent indicating adequate liquidity in the banking system.On the other
hand, lower inflation rate, excess liquidity and healthier competition in the banking system
exerted a downward pressure on the interest rate of both deposit and lending in FY2016-17. The
weighted average lending rate of commercial banks decreased to 10.39 percent at the end of June
2016 from 11.67 percent of at the end of June 2015. It further reduced to 9.56 percent at the end
of June 2017. Similarly, the weighted average deposit rate was 6.80 percent at the end of June
2015, which reduced to 5.54 percent at the end of June 2016 and it further reduced to 4.84
percent at the end of June 2017. The interest rate spread decreased slightly to 4.72 percent at the
end of FY2016-17 from 4.85 percent at the end of the preceding fiscal year.
4. Price Level:
Figure 2 illustrates the general downward trend in Bangladesh's inflation rate, which went from
7.5% in 2013 to 5.4% in 2016, increased to 5.8% in 2017, and then decreased to 5.35% in
2018[4]. From a structural standpoint, both food and non-food inflation rates decreased in 2018,
with the inflation rate in urban areas falling to 6.14% from 6.21% in November while being
steady in rural regions. Inflation is expected to be kept at or below 5.6% for the 2018–2019 fiscal
year.
Figure -3 represents the volume of imports and exports for Bangladesh over time. The volume of
imports rose from $34.173 billion in 2012 to $61.5 billion in 2018. The import volume surpassed
$50 billion for the first time in 2017 as it increased by 16.4% year over year to $52.836 billion.
Petrochemical imports climbed by 32.7% year over year, and flood-affected grain imports
increased by 23 times. In just six years, exports climbed by $14.125 billion, from $25.127 billion
in 2012 to $39.252 billion in 2018. Bangladesh's import and export trade has a deficit, which has
been growing over years even while the country's overall volume of imports and exports has
been rising consistently.
majority of Bangladesh's investment and development initiatives are funded by international aid,
which also contributes significantly to Bangladesh's foreign exchange reserves. Major donors
include countries like Japan, the United States, Canada, and international organizations like the
World Bank and the asian Development Bank.
8 .Conclusion:
On the whole, Bangladesh's economy has grown rapidly in recent years. The high growth rate is
attributed to the strong exports, remittances income and manufacturing industry development of
Bangladesh. The consumer price index shows a downward trend and prices are generally under
control. The import and export volume increases by years, and the net inflow of foreign direct
investment shows the trend of increasing fluctuation. In the future, the bangladeshi economy will
continue to maintain a high growth level.