Credit for Bangladesh’s economic turnaround goes to PM Hasina, says The Diplomat article

Once termed a "basket case", now "South Asia's economic bull case" is placed far above many desperately poor African nations it was once compared to, with an estimated 2020 GDP per capita of $1,888.

Subir Bhaumik, in a March 15 opinion piece published by The Diplomat, places much credit for the economic turnaround on Prime Minister Sheikh Hasina.

Quoting Editor of The Daily Star, Mahfuz Anam, Bhaumik credits the Prime Minister for leading Bangladesh's "Golden Decade of Development" between 2010 and 2020. "She gave the country an infectious self-belief, the confidence that we can do it," Anam wrote in his column.

According to the latest IMF estimates for real economic growth, Bangladesh exceeded 8 percent in 2019. Although the coronavirus crisis has slowed the pace, growth is expected to continue at a more modest pace.

The World Bank said in its 2020 outlook that while India's GDP is set to reduce by 10 percent in FY 2020-21, Bangladesh -- poised to take over India in per capita GDP -- was expected to grow by almost 4 percent.

According to the Bangladesh Bureau of Statistics, the country's per capita income has risen nearly threefold since 2009, reaching $2,064 in 2019-20. Over the same period, the number of people living in extreme poverty has shrunk from 19 percent of the population to less than 9 percent, according to World Bank estimates. Bangladesh also moved up 13 notches to 75th place, placed ahead of India, among 107 qualifying countries in the latest Global Hunger Index of 2020.

At 50, Bangladesh is now celebrating a pivotal moment as the United Nations recommended the country be graduated to a "Developing Country" from a "Least Developed Country."

Hasina said recently that "exiting LDC status gives us some kind of strength and confidence." Her predictions of Bangladesh touching a 10 percent GDP growth rate in 2021 may not materialise because of the adverse impact of the Covid-19 pandemic, but on many fronts, Bangladesh's economic performance has indeed exceeded even government targets, wrote Bhaumik.

DW reported that Bangladeshi exports posted a 17 percent drop in receipts to $27.5 billion in 2020. However, migrant Bangladeshi workers abroad belied doomsday forecasts to send home $21.9 billion, 10 percent of that in December 2020 alone, compensating for the RMG exports loss due to the Covid-19 pandemic.

"Remittances have played a vital role in boosting the foreign exchange reserves amid the ongoing Covid-19 pandemic," said former Bangladesh Bank governor Atiur Rahman.

Hong Kong-based brokerage CLSA's Market Strategist, Christopher Wood, believes that Bangladesh needs to deprioritise its RMG sector. "This sector, on a 10-year view, faces the risk of cheap wage alternatives such as Africa, automation, and the loss of duty-free market access if Bangladesh transitions from LDC status [as scheduled for 2024]."

While speaking to Nikkei Asia, Christopher Wood also said, "For now, the challenge is to develop other sectors, with pharmaceuticals and business process outsourcing being two areas of promise. But this will require much more foreign investment."

"IT and pharma, shipbuilding and ship-breaking industries have shown promise. We need to transition from a classic working-class economy to one that prioritises innovations and diversification," technocrat-politician Sufi Farooq told The Diplomat.

Bhaumik claims that part of the blame goes to Bangladesh's persistent low rankings in the World Bank's annual "Ease of Doing Business survey", deterring foreign investors from entering the Bangladeshi market. The latest report ranked Bangladesh at 168th out of 190 countries. However, the World Bank report also stated that "Bangladesh carried out three business reforms during the past year, the most in a decade, and would need to accelerate the reform pace to further improve its regional and global competitiveness."

The Diplomat piece also finds Bangladesh Bank's chief economist Faisal Ahmed crediting the country's "density dividend" for the phenomenal economic turnaround. "The proximity of our population helped us design and spread social and economic ideas such as microfinance and low-cost health care. But we need to better manage our scarce land resources by developing industrial parks and SEZs."