GDP-The Backbone Of The Economy

The Gross Domestic Product (GDP) is that the measurement of value/national income and overall output for a particular country's economy. The full expenditures for all final goods and services produced within the country during a particular timeframe is up to the Gross Domestic Product (GDP). The economy of Bangladesh is termed the developing Laissez-faire economy. Based on nominal terms it's the 39th largest in the world and in keeping with purchasing power parity it stands within the 30th largest. Presently Bangladesh is assessed among the Next Eleven emerging market middle income economies. With a rate of 7.4% real GDP annual growth, Bangladesh's stood the world's seventh fastest growing economy in the first quarter of 2019 which currently holds around 8.15%. The capital city Dhaka and Chittagong are the main financial centers of the country, centering the Dhaka Stock Exchange(DSE) and also the Chittagong Stock Exchange(CSE) as home. Besides Bangladesh is considered as the second largest in the Indian subcontinent and also one of the world's fastest growing economy.

 

In 1971, it absolutely was incredibly poor while becoming a free country. The growth rate od GDP was around -14% (Negative growth). Besides political instability was rife and also the nation was devastated by floods and famine. Within the decade since 2010, Bangladesh averaged a GDP growth of 5.57%, that has been largely driven by its exports of RMGs, remittances and the domestic agricultural sector. Things have moved and now Bangladesh has an average growth rate of GDP is approximately 8.15%. United Nations has already announced Bangladesh as one of the world’s least developed countries (LDCs) since 1975, but current prediction says it is likely to shed that description by 2024. Graduating from LDC status refers a significant sign that a country’s per capita gross national income, human resources, reliability in economic and environmental activities are good enough to enable sustainable development. According to The Global Competitiveness Report 2019 from the World Economic Forum, Bangladesh was 105^th position. The more competitive a country is, the more likely to boost living standards.

In 2019, the Gross Domestic Product (GDP) in Bangladesh was worth 286 billion USD. Presently Bangladesh generates 0.24% GDP value of the global economy which is incredibly very influential. The RMG sector that began in Bangladesh in the 1970s is now a $30 billion industry with diversified economy. In the mean time, the services sector makes up 53% of the country’s GDP. The booming success of the IT industry representing the digital transformation across the country and ongoing economic process of Bangladesh. Technology products are being exported nearly $1 billion each year and also the government is expecting this amount to reach $5 billion by 2021. On an average Bangladesh has around 6 Lac IT freelancers who are continuously contributing to boost up our economic development. Bangladesh has already shown wide improvements in health, education, infant mortality and life expectancy. And declining rate in population growth is also helping an increase in per capita income. The number of employed workers living below the poverty line has dropped from 73.5% in 2010 to 11.4% in 2018.

Bangladesh has got a serious beneficiary of globalization. Actually the ready-made garments (RMG) industry is labor intensive and labor is offered in Bangladesh in abundance at an inexpensive price. Because of these cheap and available work force, Bangladesh benefitted from the outsourcing of production to places where it can be done in a more cost-effective way. The abundance of labor has also made Bangladesh a major labor exporting country, who helps bringing valuable remittance. Now the political stability has resulted in very fast economic growth in the country. That’s why the GDP growth of Bangladesh in last few years has averaged around 8 percent.

But following Impact of growing Trade Conflict between the United States Of America and People's Republic of China, Developing Asia estimates currently increases 0.03% of foreign trade and tariffs on gross domestic product, exports, and employment. However, this economic process of Bangladesh along with other country has been disrupted by the outbreak of the COVID-19 pandemic. In the RMG industry, major export destinations include the United States, U.K., Germany, France, and Italy. Unfortunately these countries are highly affected by the spreading Coronavirus and garment stores in these countries are now completely shut. Exporters in Bangladesh now fail to fulfill order timely and not getting their payments on time. That’s why the buyers from these countries are also cancelling or modifying orders. As a result of this, industry owners are facing difficulty to pay wages/salaries to workers. In early March, the Asian Development Bank (ADB) predicted that in the worst case scenario the gross domestic product of Bangladesh may fall by 1.1% and 9 Lac jobs will be lost. 

Besides, ADB forecasts that, the GDP will go down to 7.80% in the year of 2020 because of COVID-19. On the other hand, The International Monetary Fund (IMF) has projected the country’s gross domestic product (GDP) growth would go down to 2% in this fiscal year. Private investment and Public Private Partnership (PPP) will also indicate trending downwards. Most importantly, many companies listed with the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) are showing negative growth in sales and in their financial statements except some pharmaceuticals companies. Among other South Asian countries, IMF also predicted that India's growth estimates for this year from 5.8% to 1.9%, and also estimated that the country would make a 7.4% growth in FY 2021, while Pakistan's growth figures will be  -1.5% and 2% for 2020 and 2021, respectively.

To cover up the impact of the pandemic, Govt. of Bangladesh Prime Minister, Sheikh Hasina on April 5, has announced a massive stimulus package of 727 billion Bangladeshi taka ($8 billion). The govt. initially declared an emergency incentive package of 50 billion taka ($5.9 million) to support the export-oriented industry. Further packages were announced aimed at controlling Coronavirus. The stimulus package is worth nearly 2.52% of total GDP. Considering the present scenario, Finance Minister AHM Mustafa Kamal has already planned expansionary budget mainly focusing on Health sector and Agricultural sector.