Abstract
The major objectives of planned
development have been increased
national income, rural development,
self-sufficiency in food, and increased
industrial production.
Economic development and macroeconomics
indicators of Bangladesh
Prepared By
Name
ID
Nusrat Sultana
183200028
Nadia Rahman
173200005
Supti Banerjee
171200111
Md. Bayezid Afnan
143200034
Prianka Akter
161200100
Prepared For
Parisa Islam Khan
Associate Professor
Introduction
Economy of Bangladesh is heavy dependence on agriculture has long contributed
to seasonal unemployment among rural farmworkers, as well as to a generally
low standard of living in many areas. To counteract this imbalance, a policy of
industrialization was adopted in the mid-20th century. During the period of
Pakistani administration (1947–71), priority was given to industries based on
indigenous raw materials such as jute, cotton, hides, and skins. The principle of
free enterprise in the private sector was accepted, subject to certain conditions,
including the national ownership of public utilities. The industrial policy also
aimed to develop the production of consumer goods as quickly as possible in
order to avoid dependence on imports.
Objective
To study the Economic development and macro-indicators of Bangladesh.
Methodology
To prepare this report we mainly depend on secondary data. Procedure of
collecting secondary data:
• Textbook
• Publications
• Wikipedia
• Related websites
Literature review
The economy of Bangladesh is a developing market economy. It's the 35th largest
in the world in nominal terms, and 30th largest by purchasing power parity; it is
classified among the Next Eleven emerging market middle income economies and
a frontier market. In the first quarter of 2019, Bangladesh's was the world's seventh
fastest growing economy with a rate of 8.3% real GDP annual growth. Dhaka and
Chittagong are the principal financial centers of the country, being home to the
Dhaka Stock Exchange and the Chittagong Stock Exchange. The financial sector
of Bangladesh is the third largest in the Indian subcontinent. Bangladesh is one of
the world's fastest growing economies.
In the decade since 2004, Bangladesh averaged a GDP growth of 4.5%, that has
been largely driven by its exports of readymade garments, remittances and the
domestic agricultural sector. According to The Economist Bangladesh is world’s
third-largest clothes-export industry the industry now employs more than 3 million
workers, 90% of whom are women. A large part of foreign currency earnings also
comes from the remittances sent by expatriates living in other countries. The
country has pursued export-oriented industrialization, with its key export sectors
include textiles, shipbuilding, fish and seafood, jute and leather goods. It has also
developed self-sufficient industries in pharmaceuticals, steel and food processing.
Bangladesh's telecommunication industry has witnessed rapid growth over the
years, receiving high investment from foreign companies. Bangladesh also has
substantial reserves of natural gas and is Asia's seventh largest gas producer.
Offshore exploration activities are increasing in its maritime territory in the Bay of
Bengal. It also has large deposits of limestone. The government promotes the
Digital Bangladesh scheme as part of its efforts to develop the country's growing
information technology sector.
Bangladesh is strategically important for the economies of Nepal and Bhutan, as
Bangladeshi seaports provide maritime access for these landlocked regions and
countries. China also views Bangladesh as a potential gateway for its landlocked
southwest, including Tibet, Sichuan and Yunnan.
As of 2021, Bangladesh's GDP per capita income is estimated as per IMF data at
US$5,811 (PPP) and US$2,227 (nominal). Bangladesh is a member of the D-8
Organization for Economic Cooperation, the South Asian Association for Regional
Cooperation, the International Monetary Fund, the World Bank, the World Trade
Organization and the Asian Infrastructure Investment Bank. The economy faces
challenges of infrastructure bottlenecks, bureaucratic corruption, and youth
unemployment.
Macro-economy
Macroeconomics refers to the study of the overall performance of the economy.
While microeconomics studies how individual people make decisions,
macroeconomics deals with the overall aggregate effect of microeconomics.
Macroeconomics is crucial for the government to understand and predict the longterm consequences of their decisions.
Goals of Macroeconomics
The overarching goals of macroeconomics are to maximize the standard of living
and achieve stable economic growth. The goals are supported by objectives such as
minimizing unemployment, increasing productivity, controlling inflation, and
more. The macroeconomy of a country is affected by many forces, and as such,
economic indicators are invaluable to assessing different aspects of performance.
Economic Indicators
1. Gross Domestic Product (GDP) - Often used as the primary indicator of
macroeconomics, absolute GDP represents the economy’s size at a point in time.
GDP is usually calculated and released by the government on a quarterly or annual
basis.
Economic Indicator - Gross Domestic Product (GDP)
As a rule of thumb, spending stimulates growth. Individual consumer consumption
drives businesses, business investments promote growth, and government spending
maintains social welfare. Net exports, as calculated by (exports – imports),
measures trade. Positive net exports represent a trade surplus, while negative net
exports represent a trade deficit. Economic growth can be calculated by comparing
GDP over time, such as year-over-year increases.
2. Inflation
Inflation is the increase of overall price levels and consequently the decrease in
purchasing power. It occurs primarily due to increased demand for products and
services, which, in turn, raises prices. Inflation, therefore, represents growth.
However, too much inflation is also harmful if purchasing power decreases much
more than inflated prices, decreasing overall spending and devaluing the currency.
The target inflation rate is usually around 1% to 3%.
3. Unemployment
Unemployment accounts for individuals who are jobless and are actively seeking
one. Individuals who are retired or disabled are not included as unemployed.
Unemployment is a natural occurrence and cannot be eliminated. We can
distinguish unemployment into different categories:
Economic Indicator - Unemployment
 Frictional unemployment occurs when individuals spend time searching for
a job.
 Structural unemployment occurs when jobs are eliminated due to economic
structural changes.
 Cyclical unemployment occurs due to fluctuations in the business cycle. The
sum of frictional and structural is called natural unemployment. It arises
from everyday events, such as individuals changing jobs or industries
shrinking from a decline in demand. The sum of natural unemployment and
cyclical unemployment represents the actual unemployment. Naturally, in
recessions, employees are laid off, and in times of prosperity, employment
rates skyrocket.
Since employment is directly related to economic output, it is a good indicator of
economic conditions. Actual unemployment is useful to gauge the economy’s
short-term conditions, while natural unemployment can identify trends in the long
term.
4. Interest rates - are the return the borrower pays from lending. They are set by
the central bank the Bangladesh bank. Because interest rates influence consumer
decisions, it is a very useful tool for influencing economic activity. When interest
rates are high, borrowing becomes more expensive, so consumers are incentivized
to reduce spending. Conversely, when interest rates are low, it is cheaper to
borrow, so consumers will be incentivized to spend more.
This is a chart of trend of gross domestic product of Bangladesh at market
prices estimated by the International Monetary Fund with figures in millions of
Bangladeshi Taka. However, this reflects only the formal sector of the economy.
Year
Gross Domestic Product
(Million Taka)
US Dollar
Exchange
Inflation
Index
(2000=100)
Per Capita
Income
(as % of USA)
1980 250,300
16.10 Taka
20
1.79
1985 597,318
31.00 Taka
36
1.19
1990 1,054,234
35.79 Taka
58
1.16
1995 1,594,210
40.27 Taka
78
1.12
2000 2,453,160
52.14 Taka
100
0.97
2005 3,913,334
63.92 Taka
126
0.95
2008 5,003,438
68.65 Taka
147
2015 17,295,665
78.15 Taka.
196
2019 26,604,164
84.55 Taka.
2.48
2.91
Mean wages were $0.58 per man-hour in 2009.
The following table shows the main economic indicators in 1980–2019. Inflation
below 5% is in green.
Year
1980
GDP
(in
bn.
US$
PPP)
GDP
per
capita
(in
US$
PPP)
41.2
500
GDP
growth
(real)
Inflation
rate
(in
Percent)
3.1 %
Total
Investment
(in Percent)
Government
debt
(in % of
GDP)
15.4 %
n/a
n/a
14.44 %
Unemployment
Rate
(in % of
GDP)
1981
47.4
560
5.6 %
14.5 %
n/a
n/a
17.16 %
1982
52.0
597
3.2 %
12.9 %
n/a
n/a
17.36%
1983
56.5
633
4.6 %
9.5 %
n/a
n/a
16.56 %
1984
61.0
664
4.2 %
10.4 %
n/a
n/a
16.48 %
1985
65.3
693
3.7 %
10.5 %
n/a
n/a
15.83 %
1986
69.3
715
4.0 %
10.2 %
n/a
n/a
16.18 %
1987
73.1
735
2.9 %
10.8 %
n/a
n/a
15.47 %
1988
77.5
759
2.4 %
9.7 %
n/a
n/a
15.74 %
1989
84.0
801
4.3 %
8.7 %
n/a
n/a
16.12 %
1990
91.1
848
4.6 %
10.5 %
n/a
n/a
16.46 %
1991
98.1
892
4.2 %
8.3 %
2.20 %
n/a
16.90 %
935
4.8 %
3.6 %
2.25 %
n/a
17.31 %
977
4.3 %
3.0 %
2.37 %
n/a
17.95 %
1,021
4.5 %
6.2 %
2.44 %
n/a
18.40 %
1,069
4.8 %
10.1 %
2.48 %
n/a
19.12 %
1,120
5.0 %
2.5 %
2.51 %
n/a
20.73 %
1,175
5.3 %
5.0 %
2.69 %
n/a
21.82 %
1,223
5.0 %
8.6 %
2.83 %
n/a
22.12 %
1,284
5.4 %
6.2 %
3.10 %
n/a
22.72 %
1,361
5.6 %
2.5 %
3.27 %
n/a
23.81 %
1992
1993
1994
1995
1996
1997
1998
1999
2000
105.1
112.3
119.9
128.2
137.1
146.8
155.9
166.9
180.2
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
193.2
205.7
221.9
241.9
265.5
292.4
319.7
344.0
365.0
391.7
425.8
460.8
496.5
537.3
581.6
629.9
710.5
785.9
869.4
1,434
4.8 %
1.9 %
3.55 %
n/a
24.17 %
1,501
4.8 %
3.7 %
3.96 %
n/a
24.34 %
1,594
5.8 %
5.4 %
4.32 %
44.3 %
24.68 %
1,713
6.1 %
6.1 %
4.30 %
43.5 %
24.99 %
1,855
6.3 %
7.0 %
4.25 %
42.3 %
25.83 %
2,018
6.9 %
6.8 %
3.59 %
42.3 %
26.14 %
2,183
6.5 %
9.1 %
3.77 %
41.9 %
26.18 %
2,325
5.5 %
8.9 %
4.07 %
40.6 %
26.20 %
2,441
5.3 %
4.9 %
5.00 %
39.5 %
26.21 %
2,592
6.0 %
9.4 %
3.37 %
35.5 %
26.25 %
2,785
6.5 %
11.5 %
3.71 %
36.6 %
27.42 %
2,979
6.3 %
6.2 %
4.04 %
36.2 %
28.26 %
3,171
6.0 %
7.5 %
4.43 %
35.8 %
28.39 %
3,396
6.3 %
7.0 %
4.41 %
35.3 %
28.58 %
3,638
6.8 %
6.2 %
4.42 %
33.6 %
28.89 %
3,900
7.2 %
5.7 %
4.35 %
33.3 %
29.65 %
4,331
7.6 %
5.6 %
4.37 %
32.6 %
30.51 %
4,730
7.9 %
5.6 %
4.30 %
34.0 %
31.23 %
5,228
8.1%
5.5%
4.29 %
33.5%
31.60 %
Economic sectors
Sectoral Shares of Gross Domestic Product (GDP)
of Bangladesh
2015-16
201617
201718
2018-19
A) Agriculture
14.77
14.17
13.82
13.32
Agriculture and forestry
11.55
10.98
10.68
10.25
Crops & horticulture
8.15
7.69
7.48
7.12
Animal Farming’s
2.01
1.93
1.86
1.79
Forest and related services
1.39
1.37
1.34
1.35
Fishing
3.22
3.19
3.14
3.07
B) Industry
28.77
29.32
30.17
31.15
Mining and quarrying
1.73
1.83
1.83
1.82
Natural gas and crude petroleum
0.65
0.64
0.62
0.58
Other mining & coal
1.08
1.18
1.2
1.24
Manufacturing
17.91
18.28
18.99
19.89
Large & medium scale
14.58
14.93
15.63
16.37
Small scale
3.34
3.35
3.36
3.52
Electricity, gas and water supply
1.45
1.4
1.38
1.33
Electricity
1.12
1.09
1.07
1.04
Gas
0.26
0.24
0.24
0.22
Water
0.07
0.07
0.07
0.07
Construction
7.67
7.81
7.98
8.12
C) Service
56.46
56.5
56
55.53
13.01
13.05
13.15
13.34
Hotel and restaurants
1.04
1.03
1.04
1.04
Transport, storage & communication
10.27
10
9.61
9.34
Land transport
7.76
7.64
7.38
7.22
Water transport
0.62
0.59
0.55
0.51
Air transport
0.08
0.07
0.07
0.07
Support transport services, storage
0.49
0.47
0.46
0.44
Post and Tele communications
1.32
1.24
1.16
1.1
Financial intermediations
3.86
3.91
3.93
3.89
Monetary intermediation (banks)
3.27
3.34
3.37
3.35
Insurance
0.38
0.36
0.34
0.34
Other financial auxiliaries
0.21
0.21
0.22
0.21
Real estate, renting and business activities
7.51
7.73
7.82
7.87
Public administration and defense
4.05
4.19
4.24
4.09
Wholesale and retail trade; repair of
motor vehicles, motorcycles and personal and
household goods
Education
2.82
3.04
3.03
3.02
Health and social works
2.11
2.08
2.07
2.15
Community, social and personal services
11.79
11.46
11.11
10.78
Major Findings
From the above chart it is founded the sustainability of development in Bangladesh
faces challenges from many domestic factors. The deficit in governance, the
inadequacy of various physical and social infrastructures, income inequality, and
so on, are revealed as binding constraints to the sustainability of development in
Bangladesh.
Recommendation
The way for Bangladesh to meet these challenges and to continue its hitherto
successful development path toward the future dream of becoming a developed
country. It identifies some possible areas in which Bangladesh’s future growth may
lie and suggests tentative policy measures to address the present challenges and
move toward those future development-enhancing areas.
Conclusion
This report analyses the trends in the major macro-economic indicators of
Bangladesh, considering economic growth and standard of living, inflation,
unemployment, balance of payment, Government Fiscal and Monetary policy and
various aspects of the economy of Bangladesh.