Story in: February-2024

Story: Bangladesh will become the 20th largest economy by 2038

Bangladesh will become the 20th largest economy by 2038

Bangladesh is poised to become the 20th largest economy in the world by 2038 due to continued economic growth. According to the forecast of the London-based Center for Economics and Business Research (CEBR) on 27/12/2023, such news has been received.

CEBR forecasts that annual gross domestic product (GDP) growth will accelerate to an average of 6.8 percent between 2023-24 and 2027-28, before slowing to an average of 6.2 percent per year over the next decade. The next 15 years will see Bangladesh rapidly climb up the World Economic League Table (WELT) rankings. CEBR predicts that Bangladesh will register a significant jump of 17 places in the table by 2038, from its current position of 37th. Bangladesh will climb three places over the next year and reach 23rd place by 2033. CEBR forecasts economic growth in 192 countries.

As of 2023, Bangladesh's purchasing power parity (PPP)-adjusted GDP per capita is estimated at $8,673 and is classified as a lower-middle-income country. After the economy expanded 7.1 percent in 2021-22, growth is expected to moderate to 6.0 percent last fiscal year, leaving output 25.6 percent above pre-pandemic levels. The slowdown in growth in 2022-23 was driven by a contraction in industrial activity, primarily due to reduced export demand from advanced economies.

The sharp devaluation of the local currency, Taka along with upward revision of fuel and fuel prices in the domestic market caused a significant increase in production and transportation costs.

This in turn has contributed to a massive increase in consumer prices. In 2023, inflation is projected to reach 9 percent, a significant increase over the average inflation rate observed over the ten years to 2021, which stood at 6.3 percent. In response to inflationary pressures, Bangladesh Bank followed a tighter monetary policy and raised the policy rate to 6.50 percent.

Notably, there has been a paradigm shift in Bangladesh's overall monetary policy framework over the past year, shifting from a monetary targeting framework to an interest rate targeting framework, CEBR said. This change is accompanied by a commitment to a unified market exchange rate, departing from the managed floating exchange rate system in place since May 2003. This system includes differential rates for exports, imports, and remittances. These policy changes are linked to the country's participation in the IMF program that began earlier in the year.

Government debt as a share of GDP is expected to rise to 39.4 percent in 2023, up from 37.9 percent in 2022. The government managed a rather high fiscal deficit in 2023, at an estimated 4.5 percent, partly facilitated by a low debt-to-GDP ratio. It worked to boost the economy last November, CEBR said. CEBR also said that it has recently become common to claim that the global economic outlook has become more uncertain than usual. "Perhaps uncertainty is the new 'normal'. Nevertheless, our short-term global forecasts have been surprisingly accurate in recent years, although our medium-term forecasts have been low," it said. CEBR added that India is set to become the world's third-largest economy by 2032 and eventually overtake China and the US to become the "world's largest economic superpower" by the end of this century. -Editor at Media Information Dependence


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