Future Prospect of Bangladesh Economics

INTRODUCTION

The economy of Bangladesh has experienced an average of 4% plus growth per annum throughout the 1990s. Even during the year of devastating floods (FY1999), the economy grew by 4.9%. Average GDP growth in the 1990s (FY1991-2000) was 4.78%, which was one percentage point higher than that of the previous decade (i.e. 3.74% in FY1981-90). The second half of the 1990s demonstrated a more impressive growth performance (5.29%, FY1996-2000) in comparison to the first half (4.49% for FY1991-95). According to the revised estimates, GDP growth rate in FY2001 was 5.16% (Bhattacharya, 2002).

The experience of the 1990s has given rise to the hope that the real GDP growth in the coming years will be higher than what has already been achieved. According to the draft Interim Poverty Reduction Strategy Paper (I-PRSP) report (2002), the real GDP growth in FY2004 and FY2005 were expected to be 6.0% and 6.3%, respectively.

External factors such as export, import, remittances, and foreign aid have always played important roles to Bangladesh’s economy. However, the relative importance of the various external factors has changed over time. In the 1970s, the growth of the economy was sluggish and growth of exports was insignificant. The volume of export of Bangladesh’s major traditional items was actually lower in most years of the decade of seventies than what is attained in FY1970, the year before the start of the liberation war. Both the balance of trade deficit and the current account deficit as a proportion of GDP almost doubled between FY1973 and FY1980 (Hossain et al., 1998). During that period the country was following an import substituting industrial policy and the global economy had a protectionist approach to trade. In addition, the country was recovering from the losses from the independence war in 1971, domestic real shocks of two consecutive droughts in 1972 and 1973 and floods in 1974. The country was also facing a number of international shocks such...