Macroeconomic

Performance of
Bangladesh
Group Members

1 22 24

42 51
Introduction
 Background

Fast forward 48 years

Morning of
Bangladesh • 42nd highest gdp – gdp growth
economy
consistently above 6% since
2005
• Malthusian
dystopia
• Great success in education
• a basket case
and healthcare
 Presentation

Reasons behind
What is the current success:
situation: • Drivers of growth
• Analysis of macro
and socio
Where we want to be
economic
indicators • Growth target

How to reach target, obstacles

Macro
Economic
Indicators
GDP
Bangladesh has currently the 42nd highest GDP in the world

Largest Contributors: RMG, Pharmacy, Agriculture and other

exports

Constricted export portfolio

 GDP
GDP Growth Rate Per capita GDP ($)
9.00 1800.00

1600.00
8.00
1400.00

7.00 1200.00

Per capita GDP ($)

GDP Growth Rate

1000.00
6.00
800.00

5.00 600.00

400.00
4.00
200.00

3.00 0.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Year Year

GDP growth rate Per capita GDP ($)

Source: (World Bank, 2019) Source: (World Bank, 2019)
GDP
Still not the perfect representation

Unrecorded income, untaxed and unregisterd incomes are

unaccaounted

Inconsistent with other indicators and factors

GNI
Differs from
GNP in
terms of
income
sourced
rather than
outputs
produce

Incorporates all
sorts of foreign
incomes
received
including
Foreign Direct
Investment
(FDI),
remittance,
Foreign aids
GNI
GNI
300

250

200
GNI (billions $)

150

100

50

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Year

GNI
Source: (World Bank, 2019)
GNI
Remittance
Contribution

Foreig
n Aid
Inflation
Rise in price of goods and services

Reasons: abundant money supply,

demand increases

Good when within limits

Inflation
Inflation
12

10

8
Infaton

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Year

Inflation
Source: (World Bank, 2019)
Inflation
Drastic Price Hikes and fluctuation

Money market and Banking sector

adversely affected

Advantageous for Government in

some cases
Unemployment

Activel
y
looking
for jobs Vital for
rigorous
growth &
sustaining
the economy
Unemployment

4% to 6%:
Assumptio
n of full
level of
employme
nt Labor Force
Participation
Rate
increased to
58.72 %
Unemployment

Unemployment rate of Bangladesh (2010-

2018)
Source: (Ceicdata)
Socio
Economic
Indicators
Gini Co-efficient

Gini co-efficient (World Bank

Estimate)
Gini Co-efficient

• While the current data shows a negative

aspect, real inequality situation is far worse
• Our rich class of society is reluctant to
show and report their actual wealth and
income in order to evade taxes.
HDI Year HDI Value
2000 0.468
2005 0.505
2010 0.545
2015 0.592
2016 0.597
2017 0.608

Bangladesh’s HDI trends based on consistent time series data

Source: (UNDP)
HDI
• Assessment of three factors;
Life expectancy, education &
standard of living
• The values show upward trend &
positive impact
• Challenge will be increasing
number of population
Drivers
Of
Growth
Remittance

Remittance earning over the years in Millions USD

Source: (Bangladesh Bank, 2019)

Remittance
Year/Month Remittances
In Million USD In Billion BDT

2019-20 (July) 1597.66 135.00

2018-19 (July) 1318.18 110.39

2017-18 (July) 1115.57 89.94

2016-17 940.75 74.54

(February)

Remittance earning over the years in Millions USD

Source: (Bangladesh Bank, 2019)

Remittance
• about two decades, remittance has
been contributing around 35% of
export earnings
• second largest sector of foreign
currency earnings after the garments
• Affects all of the macroeconomic
indicators positively
• There are also some negative sides
 Vision 2041
• 2nd Perspective Plan after vision
2021
• After success of MGD with
commitment to SDG
• Execution through 8th and 9th 5
year plan
• Eradication of extreme poverty
• Sustainable growth
 Delta Plan 2100
• Long term development of Bangladesh
• Adaptation to Climate Change impacts
• Sustainable growth in the face of
natural disaster and risks
• Environmentally sustainable and
climate change resilient delta nation
 RMG

Success Story
• Exploitation of cheap
labor
• Facilities as a Low
Income Country
• Govt. support
RMG
What to do now?
• Image deficit and branding
• Product pricing
• Wage and productivity
• Markets and policies
• Innovation to industry: I2I project
4th Industrial Revolution
Challenges
Ahead
Ease of Doing Business

Country Rank
India 77
Sri Lanka 100
Pakistan 136
Banglades 176
h
Bangladesh in terms Ease of Doing
Business in South Asia
Source: (World Bank, 2019)
Ease of Doing Business
Ease of Doing Business

178

177
176

176
172
132

130
122
119

118

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Bangladesh in Ease of Doing Business index (2009-

2018)
(World Bank, 2019)
 ‘s 10 topics impacting EoDB
Improvement Score (% points)
Enforcing Contracts
Trading across Borders
Paying Taxes
Protecting Minority Investors
Getting Credit
Resolving Insolvency
Registering Property
Getting Electricity
Dealing with Construction Permits
Starting a business
Overall
0 1 2 3 4 5 6 7 8 9
Source:
https://www.doingbusiness.org/en/data/exploreeconomies/bangladesh#DB_pi
 To Improve EoDB

Protection
To
of
minority investors
Paying

Getting
Promot
Credit e
Busine
Trading
across Borders
ss Enforcing
Contracts

Security
for
Foreign Investors
 Steps taken by Govt. so far
Infrastructure Development

Padma Bridge Metro Deep Sea Ports

TAX HOLIDAY
Rail DUTY EXEMPTION
FREE FLOW FDI
ALLOWING JOINT VENTURE
100 ROYALTIES
TAX EXEMPTION - CAPITAL
ECONOMIC ZONES GAINS
ALLOWING SHARE TRANSFER
PROMOTING RE-
INVESTMENT
RESIDENT & CITIZENSHIP
 FDI
FDI ( Million USD)
3613 Equity Capital ;
3233 Reinvested
Earnings; $1,124.13
$1,309.11
2235 2333 2152 Breakdown of FDI
FDI Source:
1599 1551
Source: (World 913
1136
1293
(UNCTAD, 2019)
Bank, 2019)
Intra-Company
Loans; $1,180.06

Equi ty Capi tal Intra-Compa ny Loa ns Rei nvested Ea rni ngs

Sectors of FDI (in millions)

110.55 101.91
219.87 1010
282.54
Sectors of FDI
408.08
Source:
729.69 (UNCTAD,
Power Sector Food Textl e and weavi ng 2019)
Banki ng Tel ecommuni caton Leather and l eather products
Tradi ng
Key Events - FDI
• 68% growth in 2018
• $1.476 billion acquisition Akij
Group’s Tobacco business by Japan
Tobacco Inc
• DSE has signed a memorandum to
sell 25% of its shares to Shenzhen
Stock Exchange and Shanghai
Stock Exchange, making them the
NPL NPL of BD (in billion USD)
12
10.8
10

8 7.16 8.95

5.15 7.44
6
6.04
4 2.74 4.89

2 2.73
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NPL (as percentage of total loans)

12
10 9.7
10 9.2 10.4

8 8.9 9.3
8.8
7.3
6
6.1
4

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
NPL (i n percentage)
NPL
No Good News!!
• Baffling Move by BB
down payment for defaulters
reduced to 2% from 10-50%

maximum 9 % interest on
rescheduled loans while the
existing interest rate12-16 %
• Politicization in Banking Sector
• Weak Loan Authorization System
 Infrastructure Development
116th among 137
Country Overall Roads Port Electricity
Infrastructure
Bangladesh 116 105 85 101
India 46 55 47 80
Pakistan 82 76 73 115
Sri Lanka 79 61 57 96

Table 9‑5: State of infrastructure in South

Asia: (2017–2018)
Source: (World Economic Forum, 2018)
Infrastructure Development
Govt. focusing But, some under-
heavily on, focused areas are
• Roads, • Exploration of new
Highways, & natural resources
Bridges • Upgradation of
• Ports Electricity
• Economic Zones Distribution
• Nuclear & Coal • Industries other than
RMG
 Agriculture – tough days ahead
Topic Agriculture Industry Service

• Booming and
Allocation of budget 5.7% 0.7% 25.30%
Huge
(2018-2019)
Population
• Rising Sea Oriented labor force 40.60% 20.40% 39%
Level
• More Natural Contribution in GDP 14.10% 33.71% 52.18%
Calamities
Growth rate 3.06% 11.99% 6.33%
• Increase in
Saltiness of the
Lands
• Changed Contribution of agriculture
Source: (Ministry of Finance Bangladesh, 2019)
Some other challenges
Manpower Export
To Dos:
• Developin
g Skilled
Manpower
• Diversifyi
ng Export
Market
Some other challenges
Lack of Good Governance

Dysfunctional Stock Market

NPL in Banking Sector
Corruption
Politicization

Political Instability
Calamities to the Business
Recommendations
Drivers Challenges

1. Increasing
Low Cost Competition and Cost
Leadership in RMG
2. 4th Industrial
Revolution –
RECOMMENDATIONS

• New differentiations –
Quality • Govt. incentive –
improve EoDB
• Diversify export oriented
manufacturing sector • Developing service
sector
• Develop export oriented
service – especially tech, • Reduce systematic
sector biz risks
Drivers Challenges Recommendations

1. Man 1. Increasing anti- 1. Ensure proper

Power immigrant facilities for
export attitude workers
2. Agricultur 2. Global warming 2. Use funds
e properly
 Tackling Premature Deindustrialization
By increasing resiliency of export oriented manufacturing
sector

RMG
• In addition to low cost leadership,
differentiate value with better quality Garments.
• Better image - Accord, Alliance.
Diversifying export oriented
manufacturing
• Filling gap that China is leaving
• Focusing on diverse competitive
 Incentive for biz: Improving EDB
By increasing resiliency of export oriented manufacturing
sector

Infrastructure development
• Utilities – Electricity, Drainage
• Hard – Land, Transportation,
Port facilities
• Protecting investments
• Soft – Access to global markets
• Initiative friendly regulations
• Tax structure that assists labor
Increase capital intensive industries
availability • Better execution and regulations –
e.g. Bankruptcy
 Developing service sector

Increase Lifelong Protectio Social safety

investm training n of for people
ents in and intangibl displaced by
educatio learning e assets automation
n and
R&D
 Overall

Good governance
Better use of
• In financial systems: Non
climate change
performing loans, Stock
market and remittance
funds
• In every steps of product
life cycle
Thank You!!