Bangladesh outshines neighbours, ADB forecasts 6.9pc GDP growth this fiscal

[Black_cats]

Bangladesh outshines neighbours​

ADB says in ADO, forecasts 6.9pc GDP growth this fiscal, warns inflationary pressure, widening of current account deficit​

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Bangladesh outshines neighbours

Bangladesh has outshone neighbours in crisis-time economic performance and may see higher growth at 6.9 per cent in the current fiscal, says the Asian Development Bank, although it cautions about rising inflation and widening of current-account deficit.

Inflation is likely to increase to 6.0 per cent in the current fiscal year (FY) 2021-22 from 5.6 per cent in the last FY2021, it forecasts.

The current-account deficit is likely to widen from 0.9 per cent of gross domestic product (GDP) in FY2021 to 2.7 per cent in FY2022 on the back of increase in imports and a decline in remittance growth, says the ADB in its flagship Asian Development Outlook (ADO) report 2022, published Wednesday in Dhaka.

About such buoyant GDP-growth projection in the current fiscal ADB's senior country specialist Soon Chan Hong said the GDP is projected to continue to grow strongly at 6.9 per cent in FY2022 on stepped-up budget spending, a strong expansion in exports and a slight improvement in agricultural output.

The Manila-based lender in its ADO 2022 also forecasts a better GDP-growth output for the next FY2023 when Bangladesh may grow at a 7.1-percent rate.

ADB's growth projection is much higher than World Bank's latest forecast made in January this year.

The WB in its 'Global Economic Prospects' report said Bangladesh's economy was expected to grow by 6.4 per cent in the current FY2022, while 6.9 per cent in the next fiscal (FY2023).

Meanwhile, Bangladesh government has taken a target for the economy to grow at a higher rate of 7.2 per cent in the current FY2022 and 7.5 per cent in the upcoming FY.

Explaining dynamics of growth, ADB Country Director in Bangladesh Edimon Ginting said they were expecting that Bangladesh's private investment would be rising further with improvement in investor confidence.

"Public investment is also expected to grow with government's large-investment projects to meet huge unmet infrastructure needs of the country," he added.

Asked about Sri Lanka's economic crisis and Bangladesh's upcoming LDC graduation, the ADB country director said that Bangladesh might not fall into that type (SL) of crisis in the near future as its economy is on strong fundamentals now.

When asked about the lessons from the recent debacle in the Lankan economy, Mr Ginting said that for a country it is very much necessary to perceive the importance of maintaining macroeconomic stability, taking correct policies, having a prudent government and a sound macroeconomic management.

Bangladesh, he feels, would not fall into foreign-debt trap either, nor in middle-income trap, since there are "engines of growth".

"But the export products should be diversified beyond RMG while further growth should be enjoyed in other places beyond the capital. Besides, its internal resources mobilization shall be enhanced to keep a strong resources support," he said about the dos for sustenance.

He noted that after the end of conflict in Sri Lanka, the growth did not continue to such extent there, but, on the other hand, growth continued in Bangladesh. "The challenge is how to handle it when it becomes a crisis."

To a question about the role of Bangladesh Bank in the current global economic situation, the ADB executive said that the central bank can continue to accommodate monetary policy to support growth and thus strike a balance in controlling inflation and supporting growth.

The main risk to this growth projection is higher prices for oil imports, and the loss of export sales beyond those built in the present forecasts, mainly due to the Russian invasion of Ukraine, he said.

"The ongoing socioeconomic recovery needs to be accelerated by enhancing domestic resource mobilization, incentivizing the private sector to create products and services, promoting modern green technologies, and fostering knowledge and innovation," he suggested.

In its ADO report the ADB says growth forecast reflects rebounds in external trade and recovery in domestic economic activities fuelled by implementation of stimulus packages and increased remittance.

The current-account deficit is likely to widen from 0.9 per cent of GDP in FY2021 to 2.7 per cent of GDP in FY2022 on increase in imports and decline in remittance growth.

The ADB country chief spelt out climate responsibilities in pursuing development. "Building climate-resilient infrastructure and services, introducing carbon tax on fossil fuels, and promoting green investments will help to further advance the current policy initiatives for managing climate change for inclusive and sustainable green growth."

The ADB notes that Bangladesh's GDP growth recovered to 6.9 per cent in the last FY2021, up significantly from 3.4 per cent in fiscal year 2020.

"Growth performance of Bangladesh is quite remarkable in 2021 compared with other South Asian countries…despite starting from a higher base. Except Bangladesh, all other South Asian economies contracted in 2020," the ADO report reads.

Its strong rebound was supported by recovery in external trade, swift and effective implementation of supportive fiscal and monetary stimulus measures to tackle the Covid-19 pandemic and a sharp increase in remittances.

The ADB Country Director mentioned that stimulus measures amounting to about 5.4 percent of GDP were announced and swiftly implemented by the government.

"Private consumption was also major contributor to growth in FY2021, supported by a sharp increase in workers' remittances to boost domestic income," he said.

To sustain this higher-growth trajectory over the medium and long term and make it more inclusive and sustainable at the same time, he also suggested giving efforts to boost competitiveness, generate employment.

The ADO 2022 forecasts that private investment will get stronger, reflecting a solid growth in private- sector credits and imports of industrial raw materials and capital goods. With large available funding, public investment will increase to support the implementation of priority large infrastructure projects. Growth in private consumption, however, may be affected by a decline in remittances.

Mr Ginting suggested increasing public investment in education, health, and social protection while the impacts of climate change need to be tackled expeditiously.

When asked about the current level of investment-to-GDP ratio, the country director said there is a need to increase that to support higher growth.

He opined that Bangladesh is still on the lower side to attract FDI while domestic investment is also equally important.

"Deeper capital and bond markets are also needed," Ginting said, adding that if the countrywide special economic zones could be operationalised properly, then there could be wider avenues of growth for Bangladesh.

Replying to another question about the low tax-GDP ratio, he said the tax expenditure needs to be streamlined in Bangladesh alongside aligning tax system further with the economy.

kabirhumayan10@gamil.com

Bangladesh outshines neighbours

Bangladesh has outshone neighbours in crisis-time economic performance and may see higher growth at 6.9 per cent in the current fiscal, says the Asian Development Bank, although it cautions about rising inflation and widening of current-account deficit. Inflation is likely to increase to 6.0 per...

thefinancialexpress.com.bd

 

[PoondolotoPandalum]

Only country that did not have its economy contract during Covid

Bengali exceptionalism perhaps?

Mind you, Bangladesh is not exactly outshining its neighbors with regard to the growth rate. The average growth rate of south Asia for 2022 is 7%. Bangladesh's projected growth is 0.1% lower than that.=

According to ADB's data, Bangladesh is expected to grow by 6.9% in FY22, and 7.1% in FY22. India is expected to grow to 8.9% in 7.5% in FY22, and as high as 8% in FY23. Partially due to their colossal dip in 2023 and the corresponding recovery, but also because they're much more industrialized. I think post-2023, both countries will have a similar growth rate, if not slightly higher for Bangladesh (at least going by Oct 2021 IMF outlook).

With exports soaring, the growth rate may exceed 7% this year, assuming domestic consumption recovers. But we will probably still grow slower than India until 2023. But Bangladesh's growth rate historically (even in the last 12 years) were a lot more stable

 

[UKBengali]

Only country that did not have its economy contract during Covid

Bengali exceptionalism perhaps?

Mind you, Bangladesh is not exactly outshining its neighbors with regard to the growth rate. The average growth rate of south Asia for 2022 is 7%. Bangladesh's projected growth is 0.1% lower than that.=

According to ADB's data, Bangladesh is expected to grow by 6.9% in FY22, and 7.1% in FY22. India is expected to grow to 8.9% in 7.5% in FY22, and as high as 8% in FY23. Partially due to their colossal dip in 2023 and the corresponding recovery, but also because they're much more industrialized. I think post-2023, both countries will have a similar growth rate, if not slightly higher for Bangladesh (at least going by Oct 2021 IMF outlook).

With exports soaring, the growth rate may exceed 7% this year, assuming domestic consumption recovers. But we will probably still grow slower than India until 2023. But Bangladesh's growth rate historically (even in the last 12 years) were a lot more stable

I do think you can say that India is more industrialised than BD.

India has a more diverse industrial base but 30% of GDP in BD comes from industry, compared to 29% in India.

BD has slightly higher share of GDP from industry but agriculture sector share in BD is just 13% compared to 16% in India.

Taking into account that India is a far larger country and so will naturally have a more diverse industrial base, the data shows that BD is now actually slightly ahead in economic development over India.


Like you say the faster growth in India over the next year or two is just going to be rebound from the massive contraction they had in 2020 and we shall again see after this time BD growing a little higher than India.


PS - ABD like all the other economic forecasters have always been 0.5-1% lower in predicted growth rates for BD than actuality. For India it has usually been the reverse.

 

[PoondolotoPandalum]

I do think you can say that India is more industrialised than BD.

India has a more diverse industrial base but 30% of GDP in BD comes from industry, compared to 29% in India.

BD has slightly higher share of GDP from industry but agriculture sector share in BD is just 13% compared to 16% in India.

Taking into account that India is a far larger country and so will naturally have a more diverse industrial base, the data shows that BD is now actually slightly ahead in economic development over India.


Like you say the faster growth in India over the next year or two is just going to be rebound from the massive contraction they had in 2020 and we shall again see after this time BD growing a little higher than India.


PS - ABD like all the other economic forecasters have always been 0.5-1% lower in predicted growth rates for BD than actuality. For India it has usually been the reverse.

I think India's period of high growth probably peaked in the 2010s. And that wasn't even that stable anyway, because growth fell to a measly (for a developing country) 4% in 2019. And projections back then didn't look that promising either. Real Asian tiger economies sustained 8%+ growth for multiple decades. I don't think the 2020s will see a higher period of growth for India. Make in India, all other bolshevik-like rhetoric designed to sell India as the next China never really worked out (what a surprise).

The 2010s was India's decade for infrastructure, foreign investment, and industrialization. Yet it finds itself in a similar, if not worse position than Bangladesh, in most economic/development indicators. The 2020s is Bangladesh's decade for infrastructure (multiple ongoing megaprojects), foreign investment (some of the largest EPZs in Asia, with investments already flowing in), and industrialization. It'll be an interesting comparison! Only Bangladesh, arguably, did a far better job at tackling the basics than India. Which failed at leapfrogging from a largely agrarian economy to an industrial one without tackling the fundamental problems. India's development model is top-down. Bangladesh is bottom-up. The fundamental difference there. $1000 distributed among 100 RMG workers generates more GDP, rejuvenates local economy far more than some IT manager buying an Iphone in Delhi, from his high monthly wage

 

[UKBengali]

I think India's period of high growth probably peaked in the 2010s. And that wasn't even that stable anyway, because growth fell to a measly (for a developing country) 4% in 2019. And projections back then didn't look that promising either. Real Asian tiger economies sustained 8%+ growth for multiple decades. I don't think the 2020s will see a higher period of growth for India. Make in India, all other bolshevik-like rhetoric designed to sell India as the next China never really worked out (what a surprise).

The 2010s was India's decade for infrastructure, foreign investment, and industrialization. Yet it finds itself in a similar, if not worse position than Bangladesh, in most economic/development indicators. The 2020s is Bangladesh's decade for infrastructure (multiple ongoing megaprojects), foreign investment (some of the largest EPZs in Asia, with investments already flowing in), and industrialization. It'll be an interesting comparison! Only Bangladesh, arguably, did a far better job at tackling the basics than India. Which failed at leapfrogging from a largely agrarian economy to an industrial one without tackling the fundamental problems. India's development model is top-down. Bangladesh is bottom-up. The fundamental difference there. $1000 distributed among 100 RMG workers generates more GDP, rejuvenates local economy far more than some IT manager buying an Iphone in Delhi, from his high monthly wage

This will be the decade where BD economy may be seen as the first Asian “Tiger” economy of the 21st century.

If you look at what the direction of its economy and politics are right now, it is almost a mirror match of what you saw in Taiwan and South Korea some decades ago. Only difference is BD military is quite weak.

India was never going to be succesful as it is a multi-ethnic country and so does not have the cohesion and strong central government required for firm direction of the country.

 

[Bilal9]

This will be the decade where BD economy may be seen as the first Asian “Tiger” economy of the 21st century.

If you look at what the direction of its economy and politics are right now, it is almost a mirror match of what you saw in Taiwan and South Korea some decades ago. Only difference is BD military is quite weak.

India was never going to be succesful as it is a multi-ethnic country and so does not have the cohesion and strong central government required for firm direction of the country.

Right on all counts. But at the end of the day India as a country and economy is vast and they have huge challenges too, not as easy to manage as Bangladesh is.

I'd rather leave the analyzing of Indian economy to Indians - especially very knowledgeable folks like @Joe Shearer dada. He knows the challenges on the ground more than we do, I'm sure.

I'd like to hear from him what his opinions are - especially what the three Modi measures like Notebandi did to Indian economy and ongoing effects of those.

 

[Wergeland]

India was never going to be succesful as it is a multi-ethnic country and so does not have the cohesion and strong central government required for firm direction of the country.

India will probably continue to grow but it will never become a China.

Bangladesh have to lay low in the geopolitical tussle that is ongoing between USA and Russia/China.

The main problem for BD goverment atm is inefficient state bureucracy, corruption and bad infrastructure. Atleast its good to thee that infrastructure is being dealt with to some extent. But everytime i hear about Bangladesh Railway. Road Authority or RAJUK, my heart sinks from fustration. Bangladesh Biman is another example.

Hopefully this will be dealt with slowly.
BD need to send its bureucracy to China to learn. Dont send them to us here in West, our bureucracy is equally fustrating, you wont learn anything of what BD really needs.

 

[Indos]

Right on all counts. But at the end of the day India as a country and economy is vast and they have huge challenges too, not as easy to manage as Bangladesh is.

I'd rather leave the analyzing of Indian economy to Indians - especially very knowledgeable folks like @Joe Shearer dada. He knows the challenges on the ground more than we do, I'm sure.

I'd like to hear from him what his opinions are - especially what the three Modi measures like Notebandi did to Indian economy and ongoing effects of those.

Snapsot of Indian current economy

Current account surplus/deficit

Trade deficit

Inflation

WPI = inflation of raw material faced by producers ( manufacturing products)
CPI = inflation of food and fuel faced by Customers

Industrial Growth

Overall Economic growth

USD/ Indian Rupee Chard

Ahead of MPC meet outcome: The Indian economy in charts

Ahead of the MPC meet outcome, we take a look at a few economic indicators to track the performance of the Indian economy as of March 2022. Overall, the indicators show a mixed trend wherein some activities like PMI services, power generation showed some amount of improvement while PMI...

economictimes.indiatimes.com

 

[UKBengali]

India will probably continue to grow but it will never become a China.

Bangladesh have to lay low in the geopolitical tussle that is ongoing between USA and Russia/China.

The main problem for BD goverment atm is inefficient state bureucracy, corruption and bad infrastructure. Atleast its good to thee that infrastructure is being dealt with to some extent. But everytime i hear about Bangladesh Railway. Road Authority or RAJUK, my heart sinks from fustration. Bangladesh Biman is another example.

Hopefully this will be dealt with slowly.
BD need to send its bureucracy to China to learn. Dont send them to us here in West, our bureucracy is equally fustrating, you wont learn anything of what BD really needs.

India will not become a failed basket case like some others but do ok. There is nothing about it that suggests it will grow to become a developed country. It will be a miracle if that happens due to the fact it is so multi-ethnic.

As for BD, corruption is never an impediment to development as countries like S Korea and Japan were highly corrupt when they were developing and still are to some extent. It matters little that maybe 10-20% of the funds for say infrastructure is looted as long as the government builds the right things and allows the private sector to grow with the right policies.

Government bureaucracy is definitely an area of improvement in BD though. Like you say China will be a good place to learn from.

 

[Bilal9]

Snapsot of Indian current economy

Current account surplus/deficit

View attachment 832561

Trade deficit

View attachment 832562

Inflation

WPI = inflation of raw material faced by producers ( manufacturing products)
CPI = inflation of food and fuel faced by Customers

View attachment 832563

Industrial Growth

View attachment 832564

Overall Economic growth

View attachment 832565

USD/ Indian Rupee Chard

View attachment 832569

Ahead of MPC meet outcome: The Indian economy in charts

Ahead of the MPC meet outcome, we take a look at a few economic indicators to track the performance of the Indian economy as of March 2022. Overall, the indicators show a mixed trend wherein some activities like PMI services, power generation showed some amount of improvement while PMI...

economictimes.indiatimes.com

Thanks for posting all the indicators brother @Indos.

Corroborates what everyone outside India knew all along.

However I am sure there is some Modi-led data-fudging going on as well.

 

[Indos]

Thanks for posting all the indicators brother @Indos.

Corroborates what everyone outside India knew all along.

However I am sure there is some Modi-led data-fudging going on as well.

Outside Indians to be precise......

 

[salute]

Thanks for posting all the indicators brother @Indos.

Corroborates what everyone outside India knew all along.

However I am sure there is some Modi-led data-fudging going on as well.

What exactly you figured out about Indian economy from those graphs? I mean have you seen trade deficit figures of Bangladesh?

Actual measure to find the health of the economy is through its revenue collection. INDIA's federal revenue collection is up by 33% to 27.07 trillion. STATE'S revenue collection would be about the same or a little bit higher. This is more than 20 times Bangladesh.

BANGLADESH for all its claimed economic growth does not justify its revenue collection. I mean how can a country that claims to have higher per capita than India buy only 8 million smartphones or 3000 cars. Even in total electronics sales too, the entire eco system is worth 4 billion where as it is 150 billion in India's case.

IN PDF, the chaddi stitching expertise is shown as some talent for the country. Thank the God that you have LDC Status.

 

[Wergeland]

What exactly you figured out about Indian economy from those graphs? I mean have you seen trade deficit figures of Bangladesh?

Actual measure to find the health of the economy is through its revenue collection. INDIA's federal revenue collection is up by 33% to 27.07 trillion. STATE'S revenue collection would be about the same or a little bit higher. This is more than 20 times Bangladesh.

BANGLADESH for all its claimed economic growth does not justify its revenue collection. I mean how can a country that claims to have higher per capita than India buy only 8 million smartphones or 3000 cars. Even in total electronics sales too, the entire eco system is worth 4 billion where as it is 150 billion in India's case.

IN PDF, the chaddi stitching expertise is shown as some talent for the country. Thank the God that you have LDC Status.

Bangladesh is a very special country.
In the coming decades people will understand what i mean. Its practically worlds largest metropolitan area. By many standards one can consider entire BD to be a continious human habitat.

So Bangladeshi people dont prioritize car.
Goverment dont want people to buy cars.
Road system is not built to handle massive private owned cars.

If it was up to me i would have banned ownership of private cars and gone all in with massive public transport development. Bangladesh is the perfect country for Intercity railways, buss lines, Metro, trams etc.

Hopefylly the government of BD can develop 10-20 cluster of mega megacity outside Dhaka.

 

[UKBengali]

If it was up to me i would have banned ownership of private cars and gone all in with massive public transport development. Bangladesh is the perfect country for Intercity railways, buss lines, Metro, trams etc.

If you look at the transport situation in BD, this is exactly what the government has been doing.

That is the reason why I am totally against creating a car industry in BD. There is no need and BD has already created many other industries(electronics, pharma, IT and shipbuilding) that can provide higher skilled jobs to it's more educated and skilled population.

Think of BD as like being a giant Singapore but with enough of land that it can also feed its population.

 

[Wergeland]

If you look at the transport situation in BD, this is exactly what the government has been doing.

That is the reason why I am totally against creating a car industry in BD. There is no need and BD has already created many other industries(electronics, pharma, IT and shipbuilding) that can provide higher skilled jobs to it's more educated and skilled population.

Think of BD as like being a giant Singapore but with enough of land that it can also feed its population.

Good policy from the government.

Ideally there should be HSR between major division level cities, like Dhaka, Chittagong, Sylhet, Rajshahi, Barrisal etc. Begin with the route between Dhaka and Chittagong.

If there are car factories they should be export oriented. Private cars ownership should be discouraged. Public transport and bicycle is optimal for BD.