Bangladesh to turn into $500b economy

| Updated: October 08, 2021 16:16:57

Bangladesh to turn into $500b economy

Bangladesh may become a US$500 billion economy with the per-capita income rising to $3,000 by 2025-26 fiscal year on the back of a steady growth, Standard Chartered Bank predicts.

The international bank reported Thursday the country's economic outlook that estimates a GDP growth of 7.2 per cent in the current fiscal year (FY), driven by several macroeconomic factors.

Higher domestic consumption and global growth rebound coupled with the vaccination drive in anti-corona battle will continue to remain as key drivers, says Standard Chartered.

It views that sustained GDP (gross domestic product) growth over 7.0 per cent during a five-year period starting in FY'22 will drive the size of Bangladesh's gross domestic product up to US$500 billion and per-capita income to $3,000 by FY'26.

"Bangladesh's economy is set to accelerate after a speed bump…The momentum will be driven by an export-demand recovery, strong remittance inflows, and public investment," said Saurav Anand, an economist at Standard Chartered, South Asia.

He feels that policy intervention will be needed for a smooth transition to middle-income status as various benefits will start to get phased away after graduation in 2026.

Mr Anand was speaking at a virtual media briefing following the 2021 Bangladesh session of the bank's Global Research Briefing series.

"We think that the government's policy will remain supportive both in terms of fiscal and monetary for the economic growth," he said.

He expects that if vaccination continues at the current pace, 70- per cent vaccination threshold will be covered by next June.

Divya Devesh, head of ASA FX Research of Standard Chartered, said the recent taka depreciation against the US dollar had been in line with expectations.

Despite the depreciation, he said, "Taka is still the best- performing currency across Asia."

"The higher global commodity prices, slower inward remittances and a strong US dollar have been the key headwinds for Taka," he said about the drags on the exchange rate.

Global Head of Research and Chief Strategist at Standard Chartered Eric Robertsen observed while the pace and distribution of global recovery remains highly uneven, Bangladesh has made a strong comeback with one of the highest GDP growths in the world in 2020.

"A robust vaccination programme and implementation of strategic infrastructure projects are expected to further increase momentum towards the nation's LDC graduation," he said.

Chief Executive Officer of Standard Chartered Bangladesh Naser Ezaz Bijoy said the government of Bangladesh has navigated the internal and external challenges of the pandemic "remarkably well".

"The resilience of Bangladesh economy gives us cause for optimism. As the vaccination drive continues, the economy is set to accelerate, while lower debt levels compared to its peers provide medium-term fiscal runway for growth," he said.

Managing Director and Head of Financial Markets at Standard Chartered Bangladesh Muhith Rahman said vaccination will remain as key force for economic recovery of the country.

He said his bank did well during the last two years while this year it is very volatile. "There are lots of limitations in the banking sector but, I think, things will pick up. We have a very optimistic view on next year," he said.

Head of Corporate Affairs, Brand and Marketing of Standard Chartered Bangladesh, Bitopi Das Chowdhury also spoke.

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