Dhaka, Bangladesh (BBN) – The new fiscal year (FY) 2015-16 has started amid strong trend in major economic indicators, raising the prospect of achieving higher growth and more economic stability in the coming days of Bangladesh.
The key economic indicators, including per capita income, inflow of remittances, foreign exchange reserve, inflation, export earnings, import and exchange rates maintained healthy trend at the very beginning of FY15, according to experts.
The Gross National Income (GNI) per capita registered a phenomenal rise, reaching at US$1,314 at the end of June last, prompting the World Bank (WB) upgrade the country’s status from low income group to lower-middle income status.
Following the WB’s disclosure on Wednesday, Prime Minister Sheikh Hasina said the country made the significant economic progress over the last few years amidst many obstacles, including political disturbances and heinous conspiracy to thwart the pace of development.
The WB’s disclosure was followed by another prestigious up-gradation in raking by the Organisation for Economic Co-operation and Development (OECD). The OECD upgraded Bangladesh’s country risk classification from six to five.
After upgrading the position, Bangladesh has surpassed its neighboring countries like Pakistan (7/7), Sri Lanka (6/7), Nepal (6/7), Myanmar (6/7) and Mongolia (7/7) in the OECD country classification, and is only behind India (3/7), according to the OECD latest statistics.
With this, Bangladesh has now become a new frontier market, graduating from a highly development aid dependent nation due to long spell of macroeconomic stability.
This will significantly lead to lowering costs for Bangladeshi entrepreneurs and banks in securing guarantees and letter of credit (L/C) confirmations.
“Bangladesh is an untold story,” Bangladesh Bank (BB) Governor Dr Rahman told to the delegation of Swiss Export Credit Agency (SERV) at a meeting recently.
Expressing satisfaction over the enhancement in OECD classification, the central bank chief said it will help lead to significant lowering of costs for Bangladeshi entrepreneurs and banks in securing guarantees and L/C confirmations.
“A large pool of young population offers demographic dividend, which if properly trained, can easily be transformed into skilled labour force, eventually brining in huge foreign reserves for Bangladesh. European countries can take advantage of this up-gradation,” the BB governor explained.
The major reason for up-gradation from country category 6 to 5 is the resilience of Bangladesh economy accompanied by high and stable economic growth for well over a decade despite political upheaval and weak external demand.
The two major achievements in the economic front were strongly supported by another disclosure by the central bank of Bangladesh that the country’s remittance earning for the first time crossed $15 billion mark, with an annual 7.6 per cent increase.
The remittances from Bangladeshi nationals working abroad were estimated at $1.43 billion in June 2015, up by $ 109.98 million compared to the previous month. In May last, the remittances stood at $1.32 billion while it was $1.29 billion in June 2014.
“The higher inflow of remittance is the outcome of our continuous efforts in the last couple of years,” BB Governor Dr. Rahman said in a statement.
The governor also said the central bank along with commercial bankers had worked hard round the year to increase the flow of inward remittances from across the world.
“Stable exchange rate of Bangladesh Taka (BDT) against US dollar has also helped achieve the steady growth of inward remittance,” Dr. Rahman explained.
He said delivery channel of inward remittances to the beneficiary has improved significantly because of the bank-led effective mobile banking under the leadership of BB.
In FY‘14, the inflow of remittance dropped by 1.61 per cent to $14.23 billion from $14.46 billion a year ago due to political turmoil and static trend in manpower export.
“We expect that the flow of inward remittances will increase further in the coming months when manpower export to Malaysia is set to start through private sectors between the two countries,” a BB senior official told BBN in Dhaka.
He said the central bank was working continuously to increase the flow of inward remittances from different parts of the world.
The remittance inflow showed phenomenal increasing trend as a result of the government initiatives to resume and increase manpower export to major Arabian countries including Saudi Arabia and the United Arab Emirate (UAE).
At the initiative of Prime Minister Sheikh Hasina, Saudi Arabia in February last lifted the ban on change of Iqama (work permit) for switching jobs. Bangladeshi workers were not allowed to change their work-permit in the past six years since 2008. In April this year the Saudi Ministry of Labor also resumed issuing visas for Bangladeshi domestic workers.
During the visit of Sheikh Hasina, UAE also signed a deal for recruiting between 1,000 and 2,000 female household workers a month from Bangladesh.
On the other hand, the country’s foreign exchange (forex) reserve crossed the US$25 billion-mark for the first time on June 25 last following steady growth of both export earnings and the flow of inward remittances.
“Bangladesh’s forex reserve has crossed the $25 billion-mark due mainly to steady growth of both export earnings and inward remittance,” Deputy Governor of the Bangladesh Bank (BB) SK Sur Chowdhury explained.
Mr. Chowdhury, also assigned to look after forex reserve and treasury management, said the country will be able to settle more than seven months’ import bills with the existing forex reserve.
Considering the forex reserve position, Bangladesh now stands second in South Asia after India whose foreign currency reserve is $354.39 billion followed by Pakistan’s $17.29 billion, the senior central banker added.
On the other hand, the revenue earning exceeded the target in the just concluded financial year. The National Board of Revenue (NBR) last week announced that it able to collect BDT 1362.67 billion, which was higher by BDT 12.39 billion from the targeted revenue receipt.
The country’s export also marked rise in the recent months despite different domestic odds.
The overall export earnings grew by nearly 3.0 per cent to $28.14 billion during the July-May period of the FY 15 from $27.38 billion in the same period of the previous fiscal, according to the Export Promotion Bureau (EPB) latest statistics.
The strength in the key major economic indicators drew attention of global financial organizations. The banking giant HSBC in its latest Global Connections Trade Forecast Report said that Bangladesh would post strong economic growth and see a bullish trend in exports up to 2030.