Why Bangladesh should be seen as a South Asian economic miracle
Bangladesh is a South Asian miracle. Dislodging India, Bangladesh has quietly made its way to the top spot of the South Asian economic wheel, writes Shuvo Das for South Asia Monitor
Bangladesh has turned into one of Asia’s most remarkable and unexpected success stories. Once one of the poorest in the Indian subcontinent, it remained an economic basket case — wracked by poverty and famine — for a number of years after emerging as an independent nation in 1971. Within 50 years of its birth, Dhaka has debunked Henry Kissinger's prophecy on Bangladesh and emerged as the next 'Asian Tiger' as a development model.
The IMF’s ‘World Economic Outlook: A Long and Difficult Ascent’ is the most recent testimonial of Bangladesh's economic miracle. According to the International Monetary Fund (IMF)-World Economic Outlook (WEO) database, Bangladesh is set to surpass India as its per capita GDP, in dollar terms, is likely to expand 4 percent in 2020 to $1,888. Its per capita GDP is growing at a rate faster than its GDP. Meanwhile, India's per capita GDP is expected to slump 10.5 percent to $1,877, the lowest in the last four years.
India's per capita GDP, until five years ago, was around 40 percent higher than Bangladesh's. However, over the last five years, Dhaka's per capita GDP has increased at a compound annual growth rate (CAGR) of 9.1 percent, compared to 3.2 percent growth recorded by India during the period, according to one account. During this period, the gap has been substantially closed owing thanks to robust agriculture production, exports and remittances. Despite the Covid-19 pandemic, export-led growth and remittances were resilient enough to withstand its detrimental effect on Bangladesh’s economy.
Besides, during the intervening period, while India's savings and investments remained lukewarm, the corresponding numbers for Bangladesh saw a sizeable surge, the Economic Times reported. Reports show that the sales of savings certificates in Bangladesh have risen by leaps and bounds. The flow of credit to the private sector is growing as well.
Bangladesh is set to post the highest per capita GDP growth rate in South Asia and the fourth highest in the whole of Asia, comfortably ahead of India and China, according to a recent IMF report. Also, its per capita GDP growth would be the sixth-highest in the world in the current calendar year as the pandemic has battered most economies in the world. No other country is ahead of Bangladesh when it comes to per capita GDP growth in 2020. Indeed, most of them would see a contraction because of the pandemic.
India's economy would contract by 10.3 percent, which is going to be the third sharpest fall in the world after Spain and Italy, the IMF report said. The de-growth projection comes after India reported a contraction in its GDP for the June quarter at 23.9 percent, making it the worst performer among G20 economies. On the other hand, Bangladesh's GDP grew 5.2 percent last fiscal year -- the highest among 46 countries in Asia, said the Asian Development Bank recently.
Pakistan's GDP shrank by 1.5 percent in FY20 and is set to grow by 0.5 percent in the current fiscal year. Pakistan's per capita GDP was $1,348.68 in 2019. Its figure for 2020 was not available in the IMF report. Besides Bangladesh, only two countries in South Asia -- Bhutan and Nepal -- would register positive growth in per capita GDP, by 2.2 percent and 3.4 percent respectively in 2020.
These success stories of Bangladesh in the socio-economic sphere aren't a mere result of 'invisible hand' of the market economy. Due credit must be conveyed to the robust and sustainable planning and policies of the Bangladesh government under the leadership of Prime Minister Sheikh Hasina. Amidst the pandemic, remittance was set to decline; however, timely 'incentive policies' not only withheld the detrimental effects of the pandemic on the economy but also surged the flow of the economy.
Bangladeshi expatriates clocked a new record in remittance by sending over $6.71 billion in the July-September period in the midst of the pandemic. The amount is 48.57 percent more than the money received in the same period last year. In September alone, the expatriates remitted more than $2.15 billion, the second-highest in a month after $2.6 billion in July. The Bangladesh government also successfully formulated export, trade and investment-friendly policies to spur the growth of export-oriented industries.
In sum, to paint a picture of how the sub-continental countries have fared so far on development indicators, it would be no exaggeration to depict Bangladesh as a South Asian miracle. All this while India has been at the centre of the South Asian economic growth story; IMF's World Economic Outlook suggests that Bangladesh has quietly made its way to the top spot of the South Asian economic wheel.
Nonetheless, with burgeoning economic successes, there are challenges to sustain, perpetuate and augment the growth stories, which must be addressed properly and prudently. Nevertheless, Bangladesh may take enormous pride on its socio-economic performance.
(The author is a Delhi-based security, defense and foreign policy analyst pursuing his doctoral degree at Jawaharlal Nehru University. Views are personal. He can be contacted at email@example.com)
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