Wednesday 25 January 2012

OVERVIEW OF THE BANGLADESHI ECONOMY


Bangladesh is a tropical country in South Asia that is situated in the delta of two major rivers that flow down from the Himalayas (the Ganges and the Jamuna). The country’s land surface is therefore largely composed of alluvial silt, rendering the soil highly fertile. Historically, this has made Bangladesh an agricultural nation; although agriculture contributes only about a fifth of the national GDP, it employs three-fifths of the labor force (ADB, 2005). Bangladesh has an estimated population of 140 million (circa 2005), living in an area of about 55,000 square miles. It thus has the unwanted distinction of being the world’s most densely populated country, and this overpopulation is at the root of many of Bangladesh’s socioeconomic problems. However, the population is largely homogeneous in terms of ethnicity, language, and religion, and this provides a valuable element of national cohesion. In spite of numerous constraints, the economy has been on a steady growth path for the last 15 years, mainly due to private sector dynamism. The constraints include pervasive political instability and violence, endemic corruption and disregard for the law, frequent natural disasters, inefficient state-owned enterprises that are hotbeds of trade unionism, lack of political will to carry through necessary economic reform, inadequate infrastructure at all levels (power generation, roads and highways, port facilities), etc. Nevertheless, the economy has proved to be resilient. Since 1990, it has grown at an average rate of 5% per year. The Asian Development Bank projects that real GDP growth will increase to 6% in 2006 and 2007 (ADB, 2005). Bangladesh’s total GDP stood at $275 billion in 2004, and per capita GDP was $2,000 (adjusted for purchasing power).
Sectorally, services constitute the largest portion of GDP with 51.7%. Industry accounts for 27.1% and agriculture 21.2%. However, the distribution of the labour force is reversed, with most people still working in agriculture (61%), and followed by services (27%) and finally industry (12%). This imbalance between output and employment is indicative of a large amount of “disguised” unemployment and underemployment. Unemployment (including underemployment) is estimated to be about 40%. The poverty rate, as of 2004, is about 45%. As shown by the above table, merchandise exports have been growing strongly in recent years and this trend is set to continue. While imports also exhibit strong growth, it should be noted that the bulk of imports consists of inputs into  

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