What was Bangladesh’s economy like before the crisis?
After Sri Lanka, Nepal and Pakistan, India’s other neighbour Bangladesh is now in a period of political instability. Following the resignation of former Prime Minister Sheikh Hasina, President Mohammad Shahabuddin has appointed Bangladesh’s only Nobel laureate Muhammad Yunus as head of the interim government. But do you know what impact this will have on the economy of Bangladesh and India? How was Bangladesh’s economy doing before this crisis?
Bangladesh’s GDP is about 1.6 trillion dollars. It has been one of the top 25 economies in the world. The biggest change in Bangladesh’s economy came when the country started exporting readymade garments. On this basis, Bangladesh’s economy gained a new luster.
4 years ago every figure was tremendous
If we want to understand Bangladesh’s economic growth, we will have to go back about 4 years to the pre-Covid period. There is definitely a possibility of a decline in Bangladesh’s GDP and economy due to the current crisis, but this was not the situation four years ago. According to data from the International Monetary Fund (IMF), Bangladesh’s GDP growth in 2019 was 7.9 percent. It was one of the fastest growing economies in the world.
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Despite the Covid crisis in the year 2020, Bangladesh’s GDP growth rate was around 3.4 percent. In the recent budget presented by the Government of Bangladesh, a target was set to increase the GDP growth rate to 6.75 percent. In June this year, the government had presented a budget of 7.97 lakh crore taka (Bangladesh currency) for 2024-25. This is an amount of about 68 billion dollars.
The World Bank had said in its April report that Bangladesh’s growth rate will be 5.7 percent between July 2024 and June 2025. At the same time, the IMF has also estimated that Bangladesh’s GDP growth rate will be 5.7 percent.
equal to India in per capita income
The story of Bangladesh’s progress does not end with GDP growth alone. In fact, the general public has also benefited from it. Bangladesh, from which Pakistan was separated, surpassed Pakistan in terms of per capita income in 2015.
After this, in the year 2020, the situation became such that Bangladesh’s per capita income reached almost the same level as that of India. While India’s economy has grown much larger in size, amounting to about $756 billion and is the fifth largest economy in the world.
Even in the year 2024, Bangladesh’s per capita income will be around $2,650. While India’s per capita income is $2,730. After some time, consumer consumption in Bangladesh will also start to compare with that of India. Bangladesh’s per capita income has seen a growth of 4% in the last three decades. While there the poverty level has declined. In the year 2000, the poverty level in Bangladesh was 48.9%, which was reduced to 24.3% in 2016.
Clothing accounts for 83% of exports
Garment exports have made the biggest contribution to Bangladesh’s progress. Zara, H&M, Levi’s – you name any international fashion brand. There is hardly a brand that is not manufactured in Bangladesh. Bangladesh is the third largest exporter of garments in the world. Goods worth about $5 billion are exported from here annually. 83% of the country’s total exports come from the garment business alone.
This is one of the reasons why India is also heavily dependent on Bangladesh for its cotton exports. India exports cotton worth about $2.4 billion every year. According to data from the Ministry of Commerce, of India’s total cotton exports in the financial year 2012-13, only 16.8% went to Bangladesh. By the financial year 2023-24, Bangladesh’s share will increase to 34.9%.
India can get this benefit
The current political instability in Bangladesh may hurt India in the long run as the situation will not remain normal even in the most reliable neighbourhood. But it may immediately benefit India at the business level. India also has a significant presence in the garment industry. India is the sixth largest garment exporter in the world.
In such a situation, due to the current situation in Bangladesh, the exports of Indian textile industry are expected to grow by 10-20 percent in the next 18 months. India’s garment exports may increase by $2-3 billion. It was $14.5 billion in 2023-24.
