Bangladesh has made remarkable progress in economic development in five decades (World Bank report)


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Bangladesh has made remarkable progress in economy and development over the past five decades and the country now needs a strong reform program to maintain its growth trajectory and further accelerate the long-term growth rate. , according to a new World Bank report. “The Country’s Economic Memorandum – Identified Fabric Change” officially launched at a city hall today (Thursday) identified key obstacles to higher growth and proposed feasible reforms to sustain rapid growth. The report called for strong policy reforms in three key areas to support growth: stem the erosion of trade competitiveness, address financial sector vulnerabilities, and ensure an orderly urbanization process. Planning Minister MA Mannan spoke at the report launch ceremony as a keynote guest, while SANEM Executive Director Professor Dr Selim Raihan and Founder of SBK Tech Ventures and the SBK Foundation, Sonia Bashir Kabir, spoke as panelists. World Bank Acting Country Director Dandan Chen delivered the keynote address while Hoon S Soh, Practice Leader, Macroeconomics, Trade, Investment and Public Sector, South Asia, World Bank, delivered the keynote address. closing speech. Nora Dihel, Senior Economist and Zahid Hussain, Senior Economist Consultant, World Bank gave a PowerPoint presentation on the report’s findings. Yutaka Yoshino, Senior Economist for Bangladesh, moderated the program. Speaking on the occasion, the Minister of Planning said that Bangladesh is on track to achieve GDP growth, achieve food self-sufficiency, achieve power connections at people’s doorsteps and increase literacy rate . “We can assure everyone that we will continue to strengthen our efforts to make more improvements,” he said. Turning to the issue of political uncertainty and instability, Mannan said political instability could be there as clouds gather in the sky. “But, we hope the storm of dark clouds does not come as it will be a bad omen for all…. it will not work to find a solution to the problems with sticks”, He also called on all relevant stakeholders including political parties to avoid the politics of violence and take the path of discussion by demonstrating civilized behavior. SANEM Executive Director Dr. Selim Raihan said that Bangladesh has done much better than other countries in maintaining macroeconomic stability. The renowned economist also underscored the need to give due importance to increasing spending on social safety net programs as well as human capital, export diversification, achieving necessary reforms in the financial sector and the mobilization of more domestic resources. The report also explored the implications of digital development and climate change as cross-cutting themes in these reform areas. “Over the past decade, Bangladesh has been among the 10 fastest growing economies,” said Dandan Chen, the World Bank’s acting director for Bangladesh and Bhutan. “But there is no room for complacency. New and emerging challenges, including technological advances and climate change, require new policy and institutional innovations to meet the changing needs of a growing economy. To achieve its vision of being an upper-middle-income country by 2031, Bangladesh will need strong and transformative policy actions,” she added.The report envisions export diversification to reduce the risk of export volatility, create new sources of growth and increase long-term foreign exchange earnings Heavy reliance on ready-made garments and Bangladesh’s protective tariff regime are hampering diversified export growth. trade competitiveness based on low wages and trade preferences, the country can increase the resilience of economic growth by diversifying t its export basket. Average customs duties in Bangladesh are higher than those of comparator countries: the average customs duty rate on intermediate goods in Bangladesh is 18.8%, about double the rate in China, Thailand and Vietnam. Global trade costs and inefficient border processes are major barriers to trade. Deep and comprehensive trade deals with the European Union and India covering tariff modernization, increased trade facilitation, and services and investment reforms can boost Bangladesh’s GDP by 0.4 and 0.5 percent respectively and exports by 1.4 and 3.9%. Increasing private sector financing is essential to sustain economic growth. Actions to improve asset quality, increase bank capitalization, and address rising non-performing loans are urgently needed to maintain financial stability and accelerate credit growth. Unlike Thailand, China and Vietnam, Bangladesh has an untapped domestic capital market, which is needed to raise long-term finance, especially for infrastructure and climate change adaptation projects. . Unlocking private sector finance for green investments and climate risk financing will become increasingly important. The country must also focus on expanding access to finance in underserved segments, such as women and MSMEs. The country should also proactively seek external resources, including through international capital markets, promoting local currency financing, easing external borrowing constraints, and attracting foreign direct investment. Although the digitization of payments has grown rapidly, with 34% of adults using digital payments in 2017 compared to 7% of adults in 2014, around 40% of adults do not have a bank account. Strengthening credit infrastructure and promoting further digitalization of financial services will be important in reaching the most underserved population. “Greater Dhaka generates a fifth of the country’s GDP and nearly half of its formal jobs. Already crowded capital must be ready to welcome climate migrants,” said Nora Dihel, Senior Trade Economist. “Better urbanization and connectivity will help absorb climate migrants and support rapid productivity growth. Successful urbanization will involve attracting commercial activities to small and medium towns. she added. This will require making the next tier of cities attractive to formal businesses and skilled workers. Cities will need to raise their own revenues to fund infrastructure investment and service provision, including affordable housing. Faster broadband speeds, better access to basic services and easier intercity transport connectivity can drive Tier 2 cities like Gazipur and Narayanganj to promote urban growth outside of Dhaka. Source: BSS AH


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