Md Mazadul Hoque
Bangladesh’s economy has been placed among the top five fastest growing economies in Asia. Our economy has also made way into the 42nd position among 75 top economies of the world in terms of size and is likely to become 26th by 2030, a confident prediction made by the Hongkong and Shanghai Banking Corporation Limited (HSBC) in its study titled “The World in 2030”. In view of the reputation we have earned, the country’s economy has also received its deserved appreciation from the world’s dominant economies. So, it is now safe to claim that Bangladesh is on the right track to achieve the status of a middle-income country by 2021. Yet, we have a long way to go, especially because the country definitely lacks prudential and sustainable economic guidelines to steer the current economic pace towards the destination.
Recently, we have been informed that India has taken a new initiative named ‘Comprehensive Economic Partnership Agreement’ (CEPA) on an aim to expand joint trade and investment facilities with Bangladesh. The agreement is likely to be signed soon as both the parties have agreed it. It is recorded that Bangladesh’s trade gap with India is widening day by day where not India is responsible alone but Bangladesh too has failed to attract India’s globally reputed investors due to the lack of a required business friendly environment. With a view to minimising trade gap between the two countries, it is high time to sign in the proposed CEPA offered by India even though South Korea, Japan, Singapore have already come under the agreement.
Over the past couple of years, trade talks among regional countries to prompt business activities among themselves are rarely seen. But talks should have been arranged on urgent basis from time to time depending on economic needs. The South Asian Association for Regional Cooperation (SAARC) comprising of eight member countries has already turned into a lame duck which came into being for strengthening regional ties in many sectors. Moreover, the Asia-Pacific Trade Agreement (APTA), South Asian Free Trade Area (SAFTA), Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), among others, are not playing remarkable roles in the interest of regional economies resulting in widening distance into relationship among member countries.
An article published in a financial daily focused that, ten years back, Bangladesh exported goods worth of $500 million to India, which now stands at about $800 million. On the other hand, Indian exports to Bangladesh have steadily increased and now stand at $8.0 billion. Why is the gap between these two neighbours increasing? This gap must be narrowed by any means through arranging some trade agreements and deals. So, the recently proposed CEPA should be warmly welcomed by Bangladesh. The need for enhancing regional cooperation is a must for Bangladesh to sustain and, in fact, solidify its economic base.
Even though Bangladesh is a lower-middle income country, its economic pace is really commendable to the leading donor agencies, and what is more encouraging is that the growth of the economy can now be compared to any developed countries’ in the globe. At this moment, the state, in order to keep hold of this growth momentum, has to take a quick decision in regard to signing agreements with the world’s regional organizations which focus on trade.
World Bank’s country director, along with leading economists and think tanks recently expressed concern over the ever fasting growth issues and raised alarm over growth vulnerabilities which might appear before us soon, and the economy might turn unstable if not addressed as soon as possible. True, projections made by World Bank, Asian Development Bank and the state’s assigned economists vary from time to time, and we cannot verify which prediction is right. For example, the World Bank said, during current fiscal year, the economy will expand at a rate of 7.0 percent annually whereas the government has already let us know that the rate is 7.86 percent during same fiscal year. However, we expect the optimum growth rate.
To keep an economy sustainable, balance of payments related to export and import, one of major macroeconomic indicators, should be surplus for easy foreign payments but our economy is running with a negative trade balance which is worse for any economy. Bangladesh Bank’s website revealed that trade balance recorded US$ 1,046 million in 2017-2018 whereas in 2018-19 the figure grew wider amounting to US$ 1,173 million. Why are we stumbling repeatedly while promoting our export volume although a series of steps have been undertaken earlier to expedite export items for gaining foreign exchange? If we fail to bolster the figure of balance of payments, economy can hardly counter an emergency and may ultimately collapse. If we want maintain the current growth trajectory, we have no other options but to lay great emphasis on increasing export.
Furthermore, the running mega projects of infrastructural developments across the country need to be completed as early as possible in order to minimise the additional cost. Necessary economic structural reforms, if needed, might be considered too. There is no denying that employment generation, human development, keeping up relations with labour importing countries, and inflow of foreign remittance are considered effective to bring sustainability to our economy.
Mazadul Hoque is currently serving at Social Islami Bank Ltd. Email: email@example.com