Declared as one of the Next 11 Economies by Goldman Sachs, Frontier 5 Economies by J. P. Morgan, Next 10 Emerging Countries by Coface, and 23rd largest economy in 2050 by PWC, Bangladesh stands at the cross road of three large economies – India, China, and South Asia region. The tale of Bangladesh is in fact a story of resilient and consistent economic growth, bourgeoning middle class population, continuous infrastructure development, and rising financial inclusion through mobile financial services.

Bangladesh’s economy has grown at a CAGR of 6.2% in last 12 years (2005-2016), showing uptrend in growth trajectory over longer term horizon. Standard deviation of growth was only 0.78% during this period making Bangladesh one of the most consistently growing country in the frontier market. This growth is largely driven by service and manufacturing sector as country’s economy gradually shifted its dependency from agricultural activities. Agriculture’s contribution to GDP reduced to 15% in 2016 from 26% in 1996.

Bangladesh is the 8th largest country in terms of population. The country has been enjoying population dividend for quite a few years now and is expected to continue it. With a median age of 26.7 years for its population (source: CIA), 65% population ages from 15 to 64. The rise in working age population ratio likely to continue till 2035, thus continuing the demographic dividend till that period.

Bangladesh has been a favorable place for thriving micro, small, and medium enterprises. The success of these businesses has increased personal income in the Bottom of the Pyramid (BoP) especially in the rural areas of the country. Per capita Income of the country stood around USD 1,602 per annum, with a 10-year CAGR of 10.5%. This increased personal income has in turn increased consumptions in the BoP segment of the society. At the same time increased financial inclusion in the BoP segment through mobile financial services (31% adults of the country has account) has encouraged savings in the segment ensuring steady consumption growth in future.

Bangladesh has been a favorable place for thriving micro, small, and medium enterprises. The success of these businesses has increased personal income in the Bottom of the Pyramid (BoP) especially in the rural areas of the country. Per capita Income of the country stood around USD 1,602 per annum, with a 10-year CAGR of 10.5%. This increased personal income has in turn increased consumptions in the BoP segment of the society. At the same time increased financial inclusion in the BoP segment through mobile financial services (31% adults of the country has account) has encouraged savings in the segment ensuring steady consumption growth in future.

Bangladesh is also one of the countries with ample supply of cheap labors making it one of the leaders in labor intensive industries like RMG. Bangladesh is the second largest exporter of RMG which accounts for majority of the country’s export. With china gradually moving away from RMG production, we are expecting a new wave of order flow to Bangladeshi RMG manufacturers.

Both the public and private sector have invested a lot in power and infrastructure project in a bid to continue this current growth trajectory in the future. The government has set a target to generate 20,000 MW electricity by 2021 to support economic growth at 7.0% per year. In addition, the government is establishing two Liquefied Natural Gas (LNG) terminals in the country to facilitate LNG import with an aim of reducing dependency on the country’s depleting reserve of natural gas. The government is also constructing bridges and roads to facilitate smooth communication among different parts of the country.

Besides, reduced inflationary pressure, positive impact of low commodity prices, comfortable buffer again external shocks with a foreign exchange reserve over USD 33bn, political calmness, rising import of capital machinery, growth in manpower export – all these indicators complement Bangladesh’s 7% GDP growth expected by the government as well International financial institutions in the upcoming years.

For further details, please review our Country Report.