28 Sept 2018
Bangladesh: Insufficient Infrastructure Remains the Bottleneck of Economic Growth
|Form of government||Parliamentary Republic|
|Major Merchandise Exports (% of total, 2016)||Major Merchandise Imports (% of total, 2016)|
|Readymade garments (69.4%)||Textiles (10.2%)|
|Jute products (2.4%)||Capital machinery (8.8%)|
|Leather products (1.4%)||Iron & steel (7.3%)|
|Top Three Export Markets (% of total, 2017)||Top Three Import Markets (% of total, 2017)|
|Germany (12.9%)||China (21.9%)|
|US (12.2%)||India (15.2%)|
|UK (8.7%)||Singapore (5.7%)|
Source: Economist Intelligence Unit
Bangladesh’s two main parties - the Awami League (AL) and the Bangladesh Nationalist Party (BNP) - dominate local politics. The secular, centre-left AL, which has been in power since 2009, has been focusing on improving ties with India and limiting religious influences in politics. The Islamic, centre-right BNP leads the opposition and tends to be more nationalistic. In the general election held in 2014, the ruling AL won a landslide victory as the BNP and its allies boycotted the election due to concerns over fairness. Prime Minister Sheikh Hasina was re-elected for her third term for another five years.
An officially secular but Muslim-majority country, Bangladesh has seen a rise of violent attacks. Tension between secularists and conservative Muslims will continue to pose threats to social stability. Bangladesh is a lower middle income country as classified by the World Bank. Although it has made substantial progress in reducing poverty, almost 25% of the populations are living in poverty. The government's priority is to promote economic development and continue to maintain its broadly business-friendly policies, in order to promote private-sector participation in the economy and attract foreign investment.
|Nominal GDP (USD bn)||195.1||221.4||249.7||272.6||303.4|
|Real GDP growth (%)||6.6||7.1||7.3||7.7||7.7|
|GDP per capita (USD)||1,210||1,359||1,516||1,638||1,805|
|Budget balance (% of GDP)||-3.7||-3.7||-3.4||-4.8||-4.8|
|Current account balance (% of GDP)||1.3||0.4||-2.5||-2.7||-2.1|
|External debt (% of GDP)||19.8||18.6||19.8||19.5||19.3|
* Estimates ^ Forecast
Source: Economist Intelligence Unit
Bangladesh is world’s second-biggest garment exporter. Garment manufacturing is the backbone of Bangladesh’s economy, generating approximately 80% of the country's export revenues. Plentiful supply of labor force helps attract foreign direct investment in the sector. Bangladesh has consistently maintained economic growth of over 6% over the past decade, making it one of the world’s fastest-growing economies.
Thanks to consistent monetary policy and fiscal discipline, Bangladesh’s macroeconomic stability has improved in recent years. Inflation was stable, helped in part by favorable agricultural production. International reserves have risen further, and the public debt-to-GDP ratio has remained largely stable at a moderate level.
While the garment industry is the largest export sector, prospects for the economy as a whole will still be influenced by the agriculture sector, which is the single largest contributor to employment. However, infrastructure remains the bottleneck of economic growth in Bangladesh. The World Bank estimated that Bangladesh must spend US$7.4 billion – US$10 billion a year until 2020 to bring its power grids, roads and water supplies up to the standard needed to serve its growing population. Other priority sectors identified by the World Bank included water supply and sanitation, solid waste management, and telecommunications.
Hong Kong-Bangladesh Trade
Total exports from Hong Kong to Bangladesh increased by 1.0% from HK$11,616 million in 2016 to HK$11,757 million in 2017. The top three export categories to Bangladesh were: (1) Textile yarn, fabrics, made-up articles and related products (-3.3%), (2) telecommunications and sound recording and reproducing apparatus and equipment (+13.5%), and (3) articles of apparel and clothing accessories (-2.7%), which represented 68.0% of total exports to Bangladesh.
HKECIC Underwriting Experience
HKECIC basically imposes no restrictions on covering Bangladeshi buyers. The Corporation’s underwriting experience on Bangladesh has been satisfactory, with no claim payment or payment difficulty case reported from August 2017 to July 2018.