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Bangladesh to become 25th largest global economy by 2035: CEBR
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28 Dec 2020, 20:30
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Bangladesh will become the 28th largest economy in the world by 2030 and 25th largest economy by 2035, according to the UK’s Centre for Economics and Business Research (CEBR).
As per the report of CEBR, the size of the economy will nearly treble to US$855 billion in 2035 from the $301 billion in 2020 in the US dollar constant prices.
In current terms, Bangladesh will become more than a trillion-dollar economy before the period, showed the latest edition of the World Economic League Table of the think-tank.
In its annual league table on the growth prospects of 193 countries, the consultancy group said that despite the Covid-19 pandemic, Bangladesh was able to escape a contraction in 2020.
The rate of gross domestic product (GDP) growth in Bangladesh is anticipated to have dipped to 3.8 percent in 2020. This compares to 8.2 per cent GDP growth recorded in 2019.
Government debt as a share of GDP rose to 39.6 per cent in 2020, which remains a low level. The government operated a fiscal deficit of 6.8 per cent in 2020, facilitated in part by the low debt to GDP ratio.
“This will have bolstered the economy in the past months,” the report said.
Between 2021 and 2025, CEBR forecasts that the annual rate of GDP growth will accelerate to an average of 6.8 per cent. However, over the remainder of the forecast horizon, economic growth is expected to decline to an average of 6.5 per cent per year.
Bangladesh has also had a purchasing power parity-adjusted GDP per capita of $5,139 in 2020, making it a lower-middle-income country. As of the middle of December, the country had recorded 7,052 COVID-19 related deaths, equating to four deaths per 1,00,000 people.
While the harm to public health inflicted by the pandemic has been relatively limited, the effect of the outbreak on the on global demand and international supply chains means that the economic damage has been considerable.
Bangladesh came 168th in the World Bank’s 2020 Ease of Doing Business rankings, suggesting that the regulatory environment is not conducive to a thriving private sector, the think-tank said.
The CEBR said the economy enjoyed a strong rate of GDP growth in the years leading up to the Covid-19 pandemic, despite a modest rate of population growth, which averaged just 1 per cent per year over the past five years.
Source: BSS
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Bangladesh Eases Import Terms for Essential Goods Ahead of Ramadan
To facilitate the import of essential goods for the upcoming Ramadan, the central bank has taken steps to provide special benefits. From now on, importers can negotiate with banks to lower the margin for opening letters of credit (LC) to a minimum level for 11 types of goods.
On Wednesday (November 6), Bangladesh Bank issued a circular regarding this.
The circular states that the demand for certain essential goods typically rises during Ramadan. With this in mind, the central bank has implemented this measure to facilitate imports, helping keep prices at a tolerable level.
It was also mentioned that importers will be able to avail of this benefit until March 31 of next year.
The directive further states that, considering the increase in demand for essential items during Ramadan, the import of items like rice, wheat, onions, lentils, edible oil, sugar, eggs, chickpeas, peas, spices, and dates should be facilitated. To keep prices manageable and ensure adequate supply, banks are instructed to maintain the LC cash margin at a minimum level based on the bank-client relationship.
Previously, a 100% cash margin or deposit was required for product imports, but now this margin will be determined based on the relationship between the client and the bank.
Industry stakeholders believe that this relaxation of LC margins will encourage importers, requiring them to tie up less cash and reducing import costs. As a result, it may help lower the prices of these goods in the market.
Ruling on Quick Rental Indemnity Clause Scheduled for November 14
The hearing has concluded on a rule questioning the legality of provisions in the Quick Rental Act—specifically, whether actions under the "Speedy Supply of Power and Energy (Special Provisions) Act 2010" can be challenged in court and if a minister can solely decide on procurement matters. The court has set November 14 as the date for the verdict.
On Thursday, November 7, the High Court bench of Justice Farah Mahbub and Justice Debashish Roy Chowdhury issued this order, marking November 14 for the verdict announcement.
Attorney Dr. Shahdeen Malik represented the petitioners during Thursday’s hearing.
Earlier, Supreme Court lawyers Shahdeen Malik and Taiyebul Islam Sourav filed a petition challenging the validity of Sections 6(2) and 9 of the act.
During the petition filing on September 2, Shahdeen Malik commented that the Quick Rental Act, as it is commonly known, allows for procurement without a tender process, granting unilateral authority to the minister to award contracts. Malik argued that such singular authority is not acceptable in a civilized state and that no law should eliminate judicial oversight.
The rule issued by the court asked why Sections 6(2) and 9 of the act should not be deemed beyond legal authority.
The secretaries of the Legislative Drafting Wing of the Ministry of Law, Finance Division, and Power, Energy, and Mineral Resources Ministry, along with the chairpersons of Petrobangla and the Power Development Board, were directed to respond to the rule.
The hearing on the rule concluded on Thursday.
Section 9 of the "Speedy Supply of Power and Energy (Special Provisions) Act 2010" states: “No question regarding the legality of any action, measure, order, or instruction made under this Act shall be raised in any court.”
Section 6(2) states: “Notwithstanding anything contained in sub-section (1), upon obtaining consent from the minister responsible for the Ministry of Power, Energy, and Mineral Resources, any purchase, investment plan, or proposal mentioned in Section 5 may be nominated for execution through limited or single-source negotiation and sent to the Cabinet Committee on Economic Affairs or Public Procurement following the procedures outlined in Section 7.”
Gold Price Drops in The World Market, Lowest in Two Months
Gold prices dipped 1% to their lowest levels in nearly two months on Tuesday (November 12) as the US dollar soared ahead of economic data and comments from Federal Reserve officials that could shed light on the interest-rate path under the Trump administration.
Spot gold was down 0.9% at $2,596.16 per ounce which is almost 3,10,809 in Bangladeshi taka, after dropping 1% to hit its lowest since Sept 20 at $2,589.59 earlier in the session. US gold futures fell 0.6% to $2,602.40.
"Dollar strength is weighing heavily on gold. Interestingly, the relationship seems to have dissipated for much of the year, but now it's back in force ever since the election," independent analyst Ross Norman said.
The dollar index rose to a four-month high, as investors continued to pile into trades seen as benefiting from the incoming Donald Trump administration. A stronger dollar makes bullion less attractive for holders of other currencies.
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"Gold has succumbed to the purple patch of the US dollar in the aftermath of the election. The President-elect's policies appear to be a boon for the dollar and potentially from an inflationary standpoint, it could slow down the Fed's rate-cutting trajectory in 2025," said Tim Waterer, chief market analyst at KCM Trade.
Gold is considered a hedge against inflation, but higher interest rates reduce the appeal of the non-yielding asset.
Focus is on the October Consumer Price Index data on Wednesday, the Producer Price Index and weekly jobless claims on Thursday, and retail sales data on Friday.
Multiple US central bank officials are also scheduled to speak this week, including Fed Chair Jerome Powell.
"There is still a fundamental path higher for gold, though it will likely require the dollar to lose some momentum. A soft inflation report would increase the odds of a December rate cut, which may give gold a reprieve," added Waterer.
Traders see a 68.5% chance of a rate cut in December, versus around 80% chance before Trump's victory, according to the CME FedWatch Tool.
According to Reuters technical analyst Wang Tao, spot gold may retest support at $2,610, a break below which could open the way towards $2,566-$2,588.
Gold Prices Drop in Four Consecutive Terms
Bangladesh Jewellers Association (BAJUS) has reduced the price of gold 4 times out of the last five price adjustments in the country's market. The total price has been reduced to Tk9,017 in four consecutive rounds.
BAJUS reduced the price of gold last Thursday (November 14). This time, the organization has reduced the price by Tk1,680 of 22-carat gold to Tk1,34,509.
According to the notification issued on Thursday (November 14) evening, the price of pure gold has decreased in the local market. As a result, the new price of gold has been fixed considering the overall situation. The new prices will be effective from Friday (November 15).
According to the new prices, per bhori (11.664 grams) of 22-carat gold will cost Tk1,34,509. Apart from this, the price of gold has been set at Tk1,28,397 per 21-carat, Tk1,10,062 per 18-carat, and Tk90,233 per bhori of traditional method gold.
In the notification, BAJUS also said that the selling price of gold must be added to the government-mandated 5 percent VAT and BAJUS-mandated minimum wage of 6 percent. However, the wages may vary depending on the design and quality of the jewelry.
Earlier, BAJUS last adjusted the price of gold in the domestic market on November 12. At that time, the organization reduced the price by Tk2,519 to Tk1,36,189 per bhori of 22-carat gold. Apart from this, the price of gold was fixed at Tk1,29,995 per 21 carat, Tk1,11,426 per 18 carat, and Tk91,411 per traditional method gold which came into effect from 13 November.
It should be noted that the price of gold has been adjusted 49 times in the country's market so far this year where the price has been increased 28 times, and reduced 21 times.
Bangladesh Garment Exports to US Increased by More Than 50pc
Bangladesh's garment exports to the US have increased by more than 50 percent in the past decade. This was taken from a report by the US Office of Textiles and Apparel (OTEXA). Among the ten countries that export clothes to the US, China is in first place, Vietnam is in second place, and Bangladesh is in third place.
Bangladesh has made significant progress in international garment exports in the last decade, especially in the US market. During this period, Bangladesh outpaced even countries like India with its cost-effective manufacturing capacity, high-quality garments, and skilled labor force.
It can also be seen from OTEXA that Bangladesh's garment exports to the US have increased by 50.79 percent. However, according to the statistics of clothing exports to the United States from 2014 to 2023 (10 years), although China is in the first position, the export of its clothing industry has decreased by almost half in a decade. And in that place, Bangladesh and Vietnam have made a strong position. At the same time, the exports of countries like India, Pakistan, and Cambodia have also increased.
According to the information of the United States Office of Textiles and Apparel, in 2014 Bangladeshi clothing exports to the United States were 4.83 billion dollars, in 2022 this export increased to 9.73 billion dollars. However, in 2023, this continuity suddenly collapsed. That year, Bangladesh's clothing exports to the United States dropped by almost a quarter to $7.29 billion. US apparel imports declined by 22.04 percent in 2023 due to Bangladesh's apparel exports. However, overall, in that decade (from 2014 to 2023), Bangladesh's garment exports to the United States have increased by 50.79 percent.
However, in the past decade, China, South Korea, Mexico, Honduras, and Indonesia have also seen declines in apparel exports to the United States. Among them, South Korea's exports decreased by 13.31 percent, Mexico's by 24.66 percent, Honduras by 6.08 percent, and Indonesia's exports decreased by 17.99 percent.
Fuel Oil Supply May Exceed Demand in Global Market Next Year: IEA
The International Energy Agency (IEA) has said that supply may exceed demand in the global fuel oil market next year.
On Sunday (November 17), the IEA organization reported this information from the forecast of a rapid increase in oil production in non-OPEC countries. Reuters news.
According to the IEA, in 2025, more than 1 million barrels of oil may be extracted per day. The main reason for this is China's weak economy. Because China is the largest buyer of crude oil in the world. The country's economy continued to shrink in September. In addition, the use of electric vehicles is increasing in China. As a result, the demand for fuel oil is decreasing. China's demand was the 'main pressure' on global oil demand this year.
Meanwhile, outside the 13 petroleum exporting countries, the United States, Guyana, Argentina, and Brazil are seeing rapid growth in oil production. The countries are on track to increase production by a combined 1.5 million barrels per day. Which is higher than IEA's oil consumption growth forecast (990 thousand barrels per day).
On the other hand, the OPEC Plus countries are withdrawing from their decision to reduce their production by 2.2 million barrels per day. They can start the work of increasing the production quota from next January.
However, even if the OPEC plus countries led by Saudi Arabia do not deviate from their decision, there will be an oil surplus of more than 1 million barrels per day compared to global demand in 2025. With the volatility in international markets caused by COVID-19, the Russia-Ukraine war, and unrest in the Middle East, only a relaxed supply situation can restore stability.
The IEA said that Trump's victory in the US election and his 'Do The Business' policy will change the war situation. The Russia-Ukraine war could ease and destabilize the Middle East. It will also affect the oil market.
The United States has retained its position as the world's largest oil producer for six consecutive years. Last August, the country's domestic production reached a daily record of 13.4 million barrels, according to the US Energy Information Administration.
ADB, WB to Provide $1.1b Loan Assistance to Bangladesh by Dec: Finance Sec
Finance Secretary Dr. Md Khairuzzaman Mozumder today said that the Asian Development Bank (ADB) and the World Bank would provide $600 million and $500 million loan assistance respectively to Bangladesh by December 2024.
Mozumder disclosed this at a press conference at the Ministry of Finance at Bangladesh Secretariat here today.
Replying to a query on the amount of loan commitments received by the interim government, he said the policies implemented by the interim government have been positively received by donor agencies such as the International Monetary Fund (IMF) and the World Bank.
“Our interim government’s policy measures have yielded good results, exceeding our initial expectations in terms of funding. For instance, we’ve successfully negotiated $600 million in loans with ADB and thus expect to receive the funds by December this year,” he added.
Besides, he highlighted progress with the World Bank, which has agreed to provide $500 million in loan support within the same timeframe. “Originally, these loans were set at $300 million and $250 million respectively, but were later doubled due to favorable negotiations.”
The Finance Secretary said the government is seeking further financial assistance from the IMF adding, “We’ve requested an additional $1 billion in support from the IMF for this year. Discussions are set to conclude when the IMF team visits on December 4 and we’re optimistic about the outcome.”
He expressed confidence in the government’s ability to implement its policies effectively and secure continued support from international financial institutions.
Chaired by Finance Adviser Dr Salehuddin Ahmed, the press conference was attended, among others, by Financial Institutions Division Secretary Nazma Mubarak, Economic Relations Division (ERD) Secretary Md Shahriar Kader Siddiky, and National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan.
Source: BSS
