Acclaimed for sound macroeconomic management and significant progress in achieving MDGs, Bangladesh makes strides towards rapid economic development and social progress. In 2006, Bangladesh’s GDP grew by 6.5 percent. In its Bangladesh Country Overview 2006, the World Bank has observed that “Bangladesh has recorded impressive economic and social gains since the 1990s”. It has noted in particular the following:

•       Steady economic growth of 4-5% annually, relatively low inflation, and fairly stable domestic debt, interest, and exchange rates.

•       This growth performance, coupled with an impressive decline in the population growth rate from 2.5% in the 1980s to 1.7% in 1990-2004, has led to a doubling of annual per capita GDP growth, from 1.6% in the 1980s to 3.3% in 1990-2004.

The International Monetary Fund in its November 2006 Report noted that “Bangladesh is reducing poverty and making headway toward meeting its MDGs.” The Fund has noted: “Sustained growth and innovative social programs have supported a steady reduction in extreme rural poverty, with the headcount ratio declining by 9 percentage points to 40 percent in the five years to 2005, according to preliminary data. Progress on most human development indicators is impressive, placing Bangladesh well on the way to meeting many of its MDGs. The remaining social and economic challenges are daunting, however, as a large part of the population remains below the poverty line.

In terms of per capita GDP growth, Bangladesh outperformed both IDA-only countries and low-income countries in this period. This growth record was also accompanied by more stable growth, itself a function of Bangladesh’s improved disaster management capacity.

Bangladesh & the Millennium Development Goals (MDGs)

The IMF has noted that “Bangladesh has taken large strides toward achieving the Millennium Development Goals”. In its latest Report, the Fund has highlighted that, “The country has outperformed most low-income countries on a range of social indicators:  

•      It increased gross primary enrollment from 72% in 1980 to 98% in 2001 and has already attained the MDG of eliminating gender disparity in primary and secondary enrollment.

•    With the sharp decline in infant mortality from 145 to 46 per 1,000 live births between 1970 and 2003, and in child mortality from 239 to 69 per 1,000, Bangladesh is set to achieve the targeted two-thirds reduction from 1990 levels by 2015. Food security has improved markedly, even for the very poor.

•  There have also been steady gains in income poverty: the share of the population in poverty declined from 59% in 1990 to 50% in 2000, with rural areas accounting for nearly four-fifths of this decline.

•  Bangladesh’s actual values for fertility, infant and child mortality, contraceptive prevalence, and crude birth and death rates are much better than would be predicted for a country at its income level.” 

The IMF has acclaimed macro-economic performance of Bangladesh and noted the following achievements:

•  Economic growth has averaged 6 percent in the past four years.
•  Reform of the foreign exchange regime has made possible sustained growth in exports and remittances, helped the economy to weather external shocks from rising.
• Oil prices and the end of the Multi-Fiber Agreement quotas, and facilitated the buildup of international reserves.
• Continued trade reform and more integration with global and regional economies are reflected in the increase of international trade from 28 percent of GDP in FY2000 to 38 percent of GDP in FY06.
•  Monetary tightening has helped contain inflationary pressures from rising food and transport prices.
•  Fiscal sustainability has been protected by limiting domestic financing of the budget deficit to 2 percent of GDP, and central government debt has been contained at 47 percent of GDP.

1   Bangladesh Economy: Key Information: GDP:

È    Nominal GDP for FY 2005-06 was USD 62 Billion (approx) with per capita GDP of apprx. USD 440

È    Average Real GDP growth rate from FY 01 – FY 05 is 5.4% (approx).

È    Estimated Real GDP growth rate for 2005-06 is 6.7%.

Inflation

•       Rate of inflation was (12 months’ point to point) 7.61% in May 2006

•       FY 06 saw rise in inflation on the back of strong growth in money supply, credit, weaker taka, increased oil and commodities price.

•       However, oil price feed through has been limited and government administers prices of other energy sources such as natural gas and electricity as well.

Business Environment

The World Investment Report 2006 brought out by UNCTAD recorded Bangladesh as registering a 50 percent growth in FDI in 2005, the second highest in South Asia. FDI in 2006 was estimated at US$692 million as against $460 million in 2004 and $350 million in 2003. These again, are impressive rates of growth, and would certainly not obtain if market perceptions were not optimistic. In fact, if the IMF’s definition of FDI is employed (recognizing reinvestment of profits as FDI), the 2005 FDI figures stood at US$845 million, an increase of 84 percent over FY 2004. This indeed, is the highest increase amongst countries in percentage terms, over the reporting period. - IMF Country Report No. 06/406, November 2006

Foreign Exchange Regulations 

•       Foreign exchange transactions are guided by Foreign Exchange Regulation (FER) Act,  1947 and Guidelines for Foreign Exchange Transactions (Vol I & II), 1996

•       Current Account was made convertible in March 1994 in Bangladesh. Capital Account payments are only subject to Central Bank approval.

•       Bangladesh Taka exchange rate against USD was made floating from May 31, 2003. Market forces now determine the USD BDT exchange rate.

Foreign Exchange Reserve

•           FX reserve grew at an CAGR of 21.67% since FY 2002

•           FX Reserve at the end of FY 2006 was USD 3.48 Bn

•           Present reserve is 2.86 month’s import

•           Reserve growth is backed by strong worker remittance and export figures.

•           75% of exports in the garment/knitwear category