Economy of Bangladesh

Topics: Inflation, Gross domestic product, Macroeconomics Pages: 28 (10002 words) Published: April 4, 2013


(Macroeconomic Performances)

DATED: 01st April, 2013


Kazi Rayhan Uddin
Lecturer, Department of Management Studies University of Dhaka


Bangladesh, small state of South-East Asia with the total area of 144,570 sq km, can‘t still shake off the ill-reputation of being one of the least developed countries, shadowed by miserable poverty, high illiteracy rate and a gigantic population of 141, 340,476 (July 2004 est.) Moreover natural disasters such as seasonal inundation, cyclones, draughts etc. constantly pursue its lot every year, which break the backbone of the economy and frustrate future planning. Economy is sick with high inflation rate.

The Economy of Bangladesh is growing one. It is basically divided into three basic sectors viz. Service, Agriculture and Industry. Among the Economic Sectors in Bangladesh, Service sector is most important. The contribution of service sector to the GDP is about 50% (Bangladesh Economic Review-2010). So, Service sectors influence the development of national economy. There is a latent demand for services in Bangladesh. To specify the need of services for huge population of Bangladesh, such sectors are to be opened for private entrepreneurs with required control. The enormous contribution of service sector and an increasing trend therein have played an important role in high growth of GDP.

Bangladesh faces the challenge of achieving accelerated economic growth and alleviating the massive poverty that afflicts nearly two-fifths of its 160 million populations. Strategies for meeting this challenge have included a shift away from state-bureaucratic controls and industrial autarky towards economic liberalization and integration with the global economy. These policy reforms were initiated in the mid-1980s against the backdrop of serious macroeconomic imbalances, caused in part by the declining level of foreign aid and in part by a preceding episode of severe deterioration in the country‘s terms of trade. The policy reforms in the 1980s included the withdrawal of food and agricultural subsidies, privatization of state-owned enterprises, financial liberalization, and withdrawal of quantitative import restrictions. The beginning of the 1990s saw the launching of a more comprehensive reform program, which coincided with a transition to parliamentary democracy from a semiautocratic rule. These later reforms were particularly aimed at moving towards an open economy – such as making the currency convertible on the current account, reducing import duties generally to much lower levels, and removing virtually all controls on the movements of foreign private capital. Besides, fiscal reforms were undertaken including the introduction of the value-added tax.

Economy of Bangladesh: Macroeconomic Performances (Abstract) The Bangladesh economy has experienced both macro-economic stability and robust economic growth following the transition to a democratic rule in the early of 1990s. In the backdrop of the deep macro-economic crisis of the late 1980s, a series of stabilization measures were introduced in the Bangladesh economy which largely restored macroeconomic stability in the early 1990s Subsequently, the Bangladesh economy registered an average GDP growth rate of 4.8 per cent in the 1990s, which was one full percentage point higher than that recorded in the previous decade (i.e. 3.8 per cent) (Bhattacharya: 2002). Despite of such impressive growth throughout the decade, the per capita income of Bangladesh at the beginning of the new decade was not only the lowest among the South Asian countries, but also below the average per capita income of the least-developed countries (LDCs). Within the decade of the 1990s, the second half demonstrated an even more impressive growth performance (5.2 per cent, FY96-00) in comparison with the first half (4.4...
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