How Bangladesh outshined Pakistan and Sri Lanka

In terms of big economies in South Asia India, Bangladesh, Sri Lanka, and Pakistan are the main four players that represent a major share of the businesses in this region to the rest of the world. Once an upper-middle-income country, far better than Bangladesh, Pakistan even India on many indicators, Sri Lanka now has been facing unprecedented economic turmoil that has led an internal political turmoil and has destabilized the smooth functioning of the country.

Due to the less capable of repaying import bills, there was a shortage of fuel, gas, life-saving medicine, and groceries that further pushed the price of daily necessary commodities. In recent news, Pakistan's new Prime Minister Shehbaz Sharif announced a ban for an indefinite time on marriage functions after 10 pm in Islamabad to conserve the electricity as the country is facing a power crisis. Shortage of fuel forces the Pakistan government to consider 5 working days in a week.

Amid the depleting foreign currency reserve and crashing economy, the finance minister of Pakistan recently told that Pakistan needs to get USD 36-37 billion to repay the foreign debt in the next fiscal year at a time when Pakistan's international bonds have lost almost one-third of their value and requires an agreement with International Monetary Fund.

While the two neighboring countries are facing an economic crisis, the Bangladesh government is all set to celebrate the opening ceremony of the mighty Padma Bridge, the mega-project that was fully financed by the Bangladesh government. The opposition parties have also thanked the government for this achievement as this bridge will make easy the communications between the capital of the country and the other 21 districts of the south and southwestern parts of the country.

Economists predict that it will increase the country's GDP by 1.23 percent and will create employment for 10 million people. Just before the completion of the mighty Padma Bridge, another mega project, the first nuclear Payra power plant also opened a new era for Bangladesh to fulfill its future electricity needs. These two mega projects were in full swing in construction even in the pandemic-hit restricted business situation.

According to the World Bank Indicators (WBI), a commonly used indicator is the debt- GDP ratio which is higher for both Sri Lanka (more than 100 percent) and Pakistan (87 percent). In the case of Bangladesh, it is around 40 percent. While the increasing trend of remittance builds the national economy of Bangladesh, the trend for both Sri Lanka and Pakistan is declining.

The data reveals that while Bangladesh's total reserve as a percentage of external debt is 63 percent, the reserve for both Sri Lanka and Pakistan is only 10 percent and 15 percent respectively. In another comparison among all South Asian countries, while Sri Lanka has $ 2.5 billion for paying for only three months of imports and Pakistan can pay for four months at the same time Bangladesh having more than $ 40 billion can pay for nine months' worth of import.

In the case of GDP also Bangladesh has been showing the fastest and consistent growth in the last couple of years from 6.5 percent a decade ago in 2011 to nearly 8 percent just before the pandemic situation. As an upper-middle-income country, Sri Lanka had also a high GDP growth of 9 percent before being trapped in the debt. Even in the pandemic-hit business situation, when Bangladesh managed a positive growth of 4 percent in 2020, the other South Asian countries either faced challenges or made slower growth than Bangladesh.

The Centre for Economics and Business Research (CEBR), one of the UK's leading economies consultancies and London-based think tanks in its annual World Economic League Table predicted that Bangladesh is all set to become the country of 24th largest economy in the world within the next 14 years.

According to another report released at the United Nations Conference on Trade and Development (UNCTAD) on June 9, 2022, Bangladesh has become the second favored investment destination in South Asia. Due to the commitments of the government to make Bangladesh an international business hub by initiating to implementation of 100 economic zone to attract FDI and domestic businesses, FDIs hit a three-year high in 2021 and Bangladesh secured second place after India in South Asia. Even after the pandemic situation when other South Asian countries are struggling to recover from economic loss, with a strong financial come back this FDIs attraction has sent a positive message about Bangladesh to the rest of the world.

Despite having good inflows of foreign currency in the first quarter of this financial year through remittance, and RMG exports, there is a risk after the country's graduation as a middle-income country.

Experts guess that due to the graduation from LDC status, Bangladesh may lose near about 20 percent of foreign exports as well as face export duty which may increase competition in the global market. In an event titled Boosting Bangladesh Trade and Competitiveness organized jointly by the Policy Research Institute (PRI) and the World Bank, senior economists of the World Bank expressed concern that low diversification and limited competitiveness would erode the high export-led growth in Bangladesh. They also stated that the average tariff is higher in Bangladesh which may further reduce the attractiveness of the exports.

The unexpected reduced remittance and fiscal deficit are also a concern for the future economic development of Bangladesh.To overcome such a situation, from now the policymakers with the help of experts, economists need to find out some integrated export-friendly plans that will direct exporters and domestic business groups to take initiatives to bring diversification in the exports and make the Bangladeshi products more attractive for the foreign markets with cost-effective.
Dr Rajib Chakraborty, Additional Director (IQAC), Former Chairman Dept of Business Administration Port City International University