World Bank, in a study, has found three obstacles to Bangladesh’s economic reform. Without massive reforms, Bangladesh’s gross domestic product (GDP) could fall below 4 percent by 2035, it said. The three obstacles are declining trade competitiveness, a weak and vulnerable financial sector, and unbalanced and inadequate urbanization. If these three obstacles can be addressed, the development will get a boost and growth will be more sustainable, the study noted. According to the World Bank report, Bangladesh has been one of the top 10 fastest-growing countries in the world for several decades. But there is no reason to be complacent. Economic boom is never a permanent trend, the report said. Also read: Bangladesh’s GDP likely to grow by 6.6% in FY 2023: ADB Growth in fast-developing countries is always at high risk. Few countries have sustained high growth for long periods. Only one-third of the countries in the top 10 continued to experience high growth over the next decade, the report said. World Bank has made some recommendations to sustain economic growth. For example, to maintain growth in exports, products should be diversified. Apart from this, Bangladesh’s tariff rate is higher than other countries, due to which the trade capacity is decreasing. Also read: Commit 2% of GDP to climate finance each year: civil society organisations Regarding the banking sector, World Bank said, it will play an important role in future economic development. Although the financial sector has improved in the last four decades, it is still not sufficient, the report said. On the other hand, urbanization is essential for Bangladesh’s next development stage. Attention should be paid to balanced urbanization, the report said. Ahsan H. Mansur, Executive Director of Policy Research Institute of Bangladesh and a former IMF official said, “I fully agree with what the World Bank has said. Our first-generation reform is done. The second and third-generation reforms were to take place. But we have not yet initiated the second-generation reforms.” Read Do more to support micro, small, medium-sized enterprises: UN Bangladesh is gradually falling behind other countries, including Vietnam. “With the current policies, we cannot take per capita income to $12,000. We have no alternative to human resource development.” He added.

Bangladesh urgently needs to go for a fresh round of reforms to strengthen the private sector to tap its economic potentials and accelerate the export-led growth, said a report on Wednesday. The report titled ‘Bangladesh Country Private Sector Diagnostic (CPSD), prepared by IFC and the World Bank, also said Bangladesh’s post–Covid recovery will force a reimagining of its developmental model, highlighting the importance of the private sector and making the reform agenda even more urgent. Taking part in the virtual report-launching event, experts said Bangladesh has the potential of becoming an economy of $800 billion by 2030 from the current $300-billion one if proper steps are taken to diversify its export basket and ensure the ease of doing business through necessary reforms. Launching the report, Prime Minister's Private Industry and Investment Affairs Adviser Salman F Rahman said the diversification of export is very important, though the country has been facing challenges in this regard. “Our dependence on the RMG has been highlighted for a long time that we need to diversify our exports …diversification should be our priority now.” He said the RMG sector has got tremendous support from the government for its expansion, but similar support has not been given to other areas, and this is something the government is now seriously looking at. “What we really need to do is to identify the reasons for which the garment sector has been so successful and we can apply the same principles to the other sectors.” Also read: Covid-19 affected 60 million-plus domestic workers in informal economy: ILO Salman said protectionism for the domestic industry is necessary since the country is going to graduate to a middle-income one.  “The pharmaceutical industry which has been identified as a real growth sector since it has got that protectionism. “Bangladesh had a positive GDP growth rate last year despite the adverse impact of the Covid-19 pandemic and it was the only country in South Asia which did not experience a recession. We’ve prepared the Eighth Five Year Plan keeping all the challenges of the pandemic in mind,” he said. The PM’s adviser said the CPSD recommendations are well aligned with the priorities of the government’s Eighth Five Year plan for setting a trajectory towards a prosperous Bangladesh by 2041. As the country is aspiring to achieve double-digit growth, Salman said, the government has taken various steps, including developing the infrastructure, increasing foreign direct investment and creating an investment-friendly climate. He said the economic zones and mega connectivity projects like Matarbari Port and Padma Bridge that are now under construction will be the gamechangers in the coming years. He said the agro-processing industry is making good progress and it will be another gamechanger for Bangladesh.    Also read: Govt. goes for more consumption and investment to recover economy from pandemic loss Mamun Rashid, Managing Partner, PricewaterhouseCoopers Bangladesh Private Limited, said the report has focused on the private sector capacity building as well as the government’s capacity building.  “When we’re talking about reforms and strengthening capacity building, I try to draw your attention towards the capacity building of our private sector, efficiency improvement of our private sector as well as improving the overall balance sheet of the private sector,” he said. IFC’s Vice President (Asia and Pacific), Alfonso Garcia Mora said the need for reforms will become even more compelling for Bangladesh to overcome the fallouts of the Covid-19 pandemic. “Finding new sources of income and growth will be an urgent priority.” He also said the private sector, which already accounts for more than 70 percent of all investment in Bangladesh, supported by a strong financial sector, will need to play an important role in spurring the recovery so the country can grow, export and create quality jobs. IFC Country Manager Wendy Werner said it is clear the private sector has an important role to play to meet the rising demand for quality healthcare and improving the efficiency of delivering health services, as health financing in the country is low compared to others at a similar level of development. “Bangladesh could also target high-end markets and introduce new technology in the readymade garment sector, and seize opportunities in footwear, leather electrical goods, and agribusiness exports,” she observed. Also read: Budget document: Preparations under way to face the challenges of developing economy World Bank’s Country Director Mercy Tembon said readymade garments have contributed significantly to Bangladesh’s economic growth. “For a more resilient, inclusive and sustainable growth, Bangladesh will need to diversify its export basket and develop a robust and sophisticated private sector, relevant in the post–Covid recovery phase when public resources will be needed most in the social sectors.” The report says key priority areas for the reform agenda include creating a favourable trade and investment environment for domestic and foreign investors, modernising and expanding the financial sector and removing impediments for developing infrastructure. “Transport and logistics, energy, financial services, light manufacturing, agribusiness, healthcare and pharmaceuticals sectors are among those with the strongest potential for private investment that could play a significant role in boosting economic growth,” the report observes.

World Bank on Wednesday forecast that Bangladesh’s Gross Domestic Product (GDP) will increase by 3.6% in 2020-2021 fiscal year, due to better than expected remittance inflows. The international lending agency said this in its twice-a-year-regional update that released on Wednesday. It also forecast that the GDP growth will be 5.1% and 6.2% in 2021-22 and 2022-23 FYs respectively. Earlier in January, 2021 the WB projected that the GDP in 2020-21 and 2021-22 FYs will be 2%, and 1.7%  respectively. Read WB okays $250 million for Bangladesh to respond to COVID-19 pandemic It said that prospects of an economic rebound in South Asia are firming up as growth is set to increase by 7.2 percent in 2021 and 4.4 percent in 2022, climbing from historic lows in 2020 and putting the region on a path to recovery. But growth is uneven and economic activity well below pre-COVID-19 estimates, as many businesses need to make up for lost revenue and millions of workers, most of them in the informal sector, still reel from job losses, falling incomes, worsening inequalities, and human capital deficits, says the World Bank in its twice-a-year-regional update, it added. Also read: WB projects 1.6 pc GDP growth for Bangladesh in 2020-21 The latest South Asia Economic Focus South Asia Vaccinates shows that the region is set to regain its historical growth rate by 2022. Electricity consumption and mobility data is a clear indication of recovering economic activity. The outlook for Bangladesh, Nepal, and Pakistan has also been revised upward, supported by better than expected remittance inflows: Bangladesh’s gross domestic product (GDP) is expected to increase by 3.6 percent in 2021; Nepal’s GDP is projected to grow by 2.7 percent in the fiscal year 2021-22 and recover to 5.1 percent by 2023; Pakistan’s growth is expected to reach 1.3 percent in 2021, slightly above previous projections. Read Bangladesh to boost spending in next two fiscals to offset Covid impact. The improved economic outlook reflects South Asian countries’ efforts to keep their COVID-19 caseload under control and swiftly roll out vaccine campaigns. Governments’ decisions to transition from widespread lockdowns to more targeted interventions, accommodating monetary policies and fiscal stimuli—through targeted cash transfers and employment compensation programs—have also propped up recovery, the report notes. “We are encouraged to see clear signs of an economic rebound in South Asia, but the pandemic is not yet under control and the recovery remains fragile, calling for vigilance,” said Hartwig Schafer, World Bank Vice President for the South Asia Region. He said that Going forward, South Asian countries need to ramp up their vaccination programs and invest their scarce resources wisely to set a foundation for a more inclusive and resilient future. Read It's time to change the mindset on taxpaying: Salman F Rahman. While laying bare South Asia’s deep-seated inequalities and vulnerabilities, the pandemic provides an opportunity to chart a path toward a more equitable and robust recovery. To that end, the report recommends that governments develop universal social insurance to protect informal workers, increase regional cooperation, and lift customs restrictions on key staples to prevent sudden spikes in food prices. South Asia, which grapples with high stunting rates among children and accounts for more than half of the world’s student dropouts due to COVID-19, needs to ramp up investments in human capital to help new generations grow up healthy and become productive workers. Noting that South Asia’s public spending on healthcare is the lowest in the world, the report also suggests that countries further invest in preventive care, finance health research, and scale up their health infrastructure, including for mass and quick production of vaccines. Read Bangladesh to see 7.5pc growth in FY2021: ADB “The health and economic benefits from vaccinations greatly exceed the costs involved in purchasing and distributing vaccines for all South Asian countries,” said Hans Timmer, World Bank Chief Economist for the South Asia Region. He also said that South Asia has stepped up to vaccinate its people, but its healthcare capacity is limited as the region only spends 2% of its GDP on healthcare, lagging any other region. "The main challenge ahead is to reprioritize limited resources and mobilize more revenue to reach the entire population and achieve full recovery. Read China's GDP expands 2.3 pct in 2020.

Bangladesh’s GDP is expected to grow by 4.5 percent in FY2020 and 7.5 percent in FY2021, the Asian Development Bank (ADB) said in the update report of Asian Development Outlook (ADO) 2020 Supplement on Thursday.   The growth forecast for FY2020 reflects sharp decrease in economic activities in the last quarter due to COVID-19 pandemic and its outbreak in Bangladesh, according to a press release.   Bangladesh’s economy is expected to recover in fiscal year 2021 after coronavirus induced slowdown in FY2020, according to the latest ADB report of ADO Supplement.   During FY2021, GDP growth rate is expected to pick up to 7.5 percent driven by gradual recovery in the first two quarters, followed by quick recovery in the following quarters.   These forecasts rest on the assumption that it would take three months, from when the outbreak intensifies in the country, for economies to get their domestic outbreak under control and to start normalising economic activities, it said.   These forecasts also consider the impacts of the government’s containment actions, and fiscal and monetary stimulus measures.