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Overcoming challenges and pursuing growth

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Bangladesh's inspiring growth and development journey has been supported by the World Bank, as the nation aspires to achieve upper middle-income status by 2031. Since 1972, the World Bank has committed over $35 billion to support Bangladesh's development efforts, making it an important partner in the country's progress.

The current government of Bangladesh has demonstrated its firm commitment to fostering inclusive growth and sustainable development through its progressive policies and strategic initiatives. By focusing on job creation, human capital development, infrastructure improvement, and attracting private investment, the government has paved the way for the nation's remarkable progress. Emphasising the importance of education and gender equality, the government's efforts have led to significant improvements in primary school enrollment, particularly for girls, showcasing its dedication to empowering the population. With a clear vision and determination, the government's proactive approach has positioned Bangladesh on a path of resilience and prosperity.

Progress and achievements

Despite facing heightened global uncertainty, Bangladesh has maintained a good track record of growth and development. Over the past two decades, the country has experienced rapid economic growth, driven by factors such as a robust demographic dividend, resilient remittance inflows, and a thriving ready-made garment (RMG) export industry. These stable macroeconomic conditions have been instrumental in propelling Bangladesh forward.

In the area of poverty reduction, Bangladesh has transformed itself from one of the world's poorest nations in 1971 to achieving the lower-middle income status in 2015. The nation is also on the track to graduation from the United Nations' Least Developed Countries (LDC) list by 2026. This progress is further reflected in the decline of poverty rates, which dropped from 41.9 per cent in 1991 to 13.5 per cent in 2016, based on the international poverty line of $2.15 a day (using the 2017 Purchasing Power Parity exchange rate). Additionally, human development outcomes have improved across various dimensions.

Current challenges

Bangladesh's resilience was evident during the rapid recovery from the Covid-19 pandemic, backed by prudent macroeconomic policies. The nation now faces few challenges in its pursuit of sustained growth. These challenges include heightened global economic uncertainty, rising inflationary pressure, energy shortages, a balance-of-payments deficit, and a revenue shortfall.

Economic outlook

Bangladesh's real GDP growth might have slowed down marginally in FY23 due to import suppression measures that have impacted economic activity. However, there is optimism that growth will pick up in the medium term as inflationary pressure eases, external conditions improve, and the implementation of reforms gains momentum.

In the medium term, the balance of payments also is projected to return to surplus as import growth moderates and remittance inflows rise, with a significant outflow of workers to the Gulf region. This expected improvement in economic conditions provides hope for sustained growth and development in the coming years.

Vision and development priorities

To achieve its ambitious vision of becoming an upper middle-income country by 2031, Bangladesh will address several key development priorities. Creating jobs through fostering a competitive business environment is crucial to absorb the growing workforce and ensure inclusive growth.

Investing in human capital development is another priority to build a skilled and capable labour force. By equipping its people with the necessary knowledge and skills, Bangladesh can unlock their potential and drive innovation and productivity across various sectors.

Efficient infrastructure is the backbone of economic growth, and Bangladesh will have to continue to invest in its development. Improved infrastructure will facilitate smoother trade, enhance connectivity, and attract both domestic and foreign investments.

Attracting private investment is vital for stimulating economic activities and expanding industries. A conducive and continued policy environment orientation that offers incentives and safeguards to investors is crucial to encourage private sector participation and entrepreneurship.

To diversify its export base, Bangladesh looks beyond the ready-made garment (RMG) sector. By developing new export industries, the nation can further reduce its reliance on a single sector and enhance economic stability.

Deepening the financial sector is essential for mobilizing domestic savings and efficiently allocating financial resources. A robust and inclusive financial system can further support the growth of small and medium-sized enterprises (SMEs) and enable better access to credit for individuals and businesses.

Making urbanization more sustainable is important as cities are hubs of economic activities and centres of innovation. Sustainable urban development will ensure better living conditions, efficient resource utilization, and reduced environmental impact.

Strengthening public institutions and implementing fiscal reforms are necessary to generate more domestic revenue for development purposes. A transparent, reliable, safe and efficient fiscal system will make sure that resources are allocated effectively and contribute to sustainable growth.

Path to sustainability

To secure a sustainable future, Bangladesh must pivot towards green growth and environmental sustainability. Adopting eco-friendly practices and technologies will not only benefit the environment but also ensure the longevity of development outcomes for the next generation.

Investing in renewable energy sources, such as solar and wind power, will help mitigate the energy shortages faced by the nation while reducing its carbon footprint. Embracing energy efficiency measures in industries and households will further contribute to a greener and more sustainable economy.

Addressing the vulnerability to climate change and natural disasters is of paramount importance for Bangladesh. As a low-lying delta region, the country is highly susceptible to the adverse impacts of climate change, including rising sea levels, cyclones, and flooding. Implementing climate adaptation measures and building resilience in infrastructure and communities will help mitigate the risks posed by these environmental challenges.

Education and social progress

Education plays a pivotal role in Bangladesh's development journey, and the nation has made significant strides towards better access to education. Notably, 98% of girls now attend primary schools, reflecting a commitment to gender equality and empowering women. Investing in education and promoting lifelong learning opportunities will further enhance human capital development and contribute to the country's overall progress.

World Bank's commitment

The World Bank's commitment to Bangladesh's development is evident in its substantial financial support. With commitments exceeding billions of dollars, the World Bank has been a reliable partner in helping Bangladesh achieve its growth and development goals.

Bangladesh's growth and development story is one of resilience, progress, and transformation. Despite facing challenges, the nation has shown remarkable progress in reducing poverty and improving human development outcomes. To achieve its vision of becoming an upper middle-income country by 2031, Bangladesh must address its economic challenges, invest in human capital, develop robust infrastructure, attract private investment, and prioritize environmental sustainability. By focusing on these key priorities, Bangladesh can pave the way for a prosperous and sustainable future for its citizens. The partnership between Bangladesh and the World Bank remains crucial in this journey, fostering continued progress and prosperity for the nation.

As Bangladesh continues its journey towards becoming an upper middle-income country by 2031, the prospects for the nation look promising and exciting. With the implementation of green growth strategies and climate resilience measures, Bangladesh is poised to navigate the challenges posed by climate change and natural disasters, ensuring a sustainable and secure future for its citizens. The ongoing partnership between the government and the World Bank provides a solid foundation for continued progress and development, leveraging expertise and financial support to further propel Bangladesh towards its goals. In view of the focus on innovation, technology adoption, and human capital development, Bangladesh's future appears vibrant, with its people empowered and the economy flourishing. As the nation unlocks its potential and builds upon its achievements, it stands ready to set a shining example of progress, prosperity, and resilience on the global stage.

Major General Dr Dilawar Singh is Senior Vice President of the Global Economist Forum, ECOSOC-UN and Co-President of Global Development Bank.

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