Bangladesh is on its way to becoming a trillion-dollar economy, according to a report by the Boston Consulting Group (BCG). Even if growth falls to 5%, the country could reach this milestone by 2040, and if a 10% growth continues, it could be reached by 2030. Bangladesh has already become an emerging economy, outpacing Vietnam, Indonesia, India, and Thailand, with an average growth rate of 6.4% over the past six years. The BCG report titled “Trillion-Dollar Prize Local Champions Leading the Way” highlighted Bangladesh’s large consumer class, young population, high economic stability, resilience of people, progress in digital methods, and fast expansion of the private sector as the key drivers of its economic success.
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Consumer optimism is playing a significant role in driving the high growth rate of Bangladesh. According to a report, 57% of respondents have a positive outlook on the future and believe that the next generation will have a better life than themselves. This solid optimism is particularly driven by the country’s shift to a skill-based economy. The increasing focus on developing skills is attracting more investments, creating new opportunities and a strong sense of hope among the people. The positive attitude of the consumers is also contributing to the country’s economic success, making Bangladesh a favourable destination for businesses and investors alike.
Increase in consumption
There has been a surge in the consumer class in Bangladesh over the last 30 years. Export-oriented industries including ready-made garment and pharmaceuticals flourished, and poverty began to decline. Currently, household consumption is contributing to 69% of GDP. According to a recent report by HSBC, Bangladesh is expected to overtake the UK and Germany to emerge as the ninth-largest consumer market globally by 2030.
Young workforce on the rise
Bangladesh has a huge young workforce ready to contribute to the high-growth landscape of the country. The median age of the population is 28 years, below that of Indonesia, India, Thailand, Vietnam, and the global average of 30 years. More than two-thirds of the total population or 68.4% is of working age, meaning 114 million people are ready to create value through employment.
Bangladeshi households are financially resilient thanks to high savings and low national debts. The nation has a high savings rate, with average savings equivalent to more than a third (34%) of GNI, compared to a global savings rate of 27%. Household consumption accounts for two-thirds (69%) of GDP, protecting the economy from external shocks. National debt levels are low relative to Asian peers, standing at just 19% of GDP. High savings are enabling high investments, with gross fixed capital formation standing at 31% of GDP in 2021, higher than all Asian peers. The economic resilience is also driven by high remittance inflow from Bangladeshis working overseas, with more than $22 billion entering the country in 2021, doubling from $11 billion in 2010.
Thriving private sector
Bangladesh’s private sector is expanding rapidly, with significant players emerging and offering a promising outlook for the future. The country is widely known for its role in the global supply chain for textile and apparel, with major domestic players such as Beximco, Square and Pacific Jeans expanding their businesses globally. Bangladesh’s telecom industry is led by three private players, who have positioned the country as the world’s ninth-largest mobile market. The NGO sector has also been a major driver of growth, with BRAC and Grameen Bank providing a safety net for the bottom of the pyramid. The BCG report said, “Over the last year, an impressive new wave of start-ups are also surging towards unicorn status, with enterprises such as ShopUp, ChalDal, and Pathao enjoying robust growth.
The industry overall has raised funding over $700 million and now the government is also taking active role to promote start-ups through ICT Division’s flagship venture capital fund Start-up Bangladesh.” With over 1,200 active start-ups in Bangladesh, the industry has raised funding over $700 million, and bKash became the country’s first unicorn. The government is also taking an active role in promoting start-ups through its flagship venture capital fund Start-up Bangladesh. The report highlights the emergence of other sectors, with multinational companies establishing franchises in Africa and the Middle East, and local players featuring in Forbes’ list for the Asia Pacific region.
Booming digital economy
Bangladesh’s digital economy continues to gain momentum, with consumer interaction increasing through digital modes. Mobile subscriptions doubled in the last 10 years, reaching 177 million in 2021, while internet users grew by 70% during this period. The volume of digital financial transactions more than doubled from 1.7 billion in 2019 to an estimated 3.5 billion in 2022 due to an improved environment digital economy.
Government’s active role in propelling growth
The government is actively contributing to the development of the nation’s economy, with public spending more than quadrupling over the last decade, from Tk 532 billion in 2012 to Tk 2,254 billion by 2022. Past government efforts have resulted in surpassing literacy rates at 70% and electricity supply to more than 300 kWh per person. Besides, key master plans such as the Smart Bangladesh ICT 2041 Masterplan and Perspective Plan of Bangladesh 2021-2041 are in place to ensure sustainable and inclusive economic growth. The government has also implemented various policies to attract foreign direct investment and boost exports, resulting in a significant rise in export earnings. With the government’s active involvement and commitment to the country’s economic development, Bangladesh is expected to continue its upward trajectory and become a middle-income country by 2024.
To conclude, Bangladesh’s economy has made remarkable strides over the past few decades, and it is on track to become a trillion-dollar economy by 2040. The country’s solid optimism, rise in consumption, young and growing workforce, high economic resilience, momentum in digital economy, government investment, fast-growing private sector, and thriving gig economy are all contributing to this growth. With the government’s active involvement, a vibrant private sector, and the rising middle class, Bangladesh is well-positioned to continue on this path of economic growth and development.