Bangladesh is likely to become a middle-income country and graduate from the LDC status in 10-15 years if 5-6% GDP growth can be maintained, the UK’s state aid agency has said.
The Department of International Development (DFID) also said that the graduation would be quicker if the annual growth could be raised to 8%.
These views came in a DFID report titled Supporting Transformational Change Over the Next Five Years.
On November 11, Paul Whittingham, deputy country representative of DFID in Bangladesh, sent a letter along with the report to the Economic Relations Department detailing the agency’s projection of the next five years’ economic status.
The agency also said that Bangladesh has been facing significant challenges in accessing justice and rule of law alongside concerns about a contraction of the space for media and the civil society.
In July, the World Bank revealed that Bangladesh now ranked among the lower-middle income countries for improved economic performance in the past year. With this, Bangladesh also stepped past the low-income threshold for the first time.
According to the DFID, Bangladesh’s formal and informal institutions are undermined by a lack of regulatory functions with power being highly centralised.
By 2030, the population is expected to grow from 160 million to 206 million, with two-thirds of this happening in the urban areas. This would mean that two million young people will be entering the labour market every year and millions of others become vulnerable to changes in weather patterns.
The DFID report also identified the areas that the government needs to work in the coming five years in order to diversify the economy and create jobs for the youth.
These areas are: power, skill development, quality of basic services, better regulation, strengthening rule of law, better functioning justice system, more comprehensive climate and disaster management, strategic approach to manging cities, and the space for debate.
When contacted, Hossain Zillur Rahman, commerce adviser to a former caretaker government, said that growth rate might remain static over the next couple of years due to lack of good governance and absence of rule of law, coupled with political unrest.
Prof Shamsul Alam, from the General Economics Division of the Planning Commission, said yesterday: “Growth rate will be 7.4% and 8% for the next two five-yearly plans respectively. Bangladesh will become a middle-income country between the two five-yearly plans.”
He also said that Bangladesh achieving the lower-middle-income status by mid-2015 was a great miracle.
Local economists and experts, who are largely skeptic about the projections, should be more practical about the country’s economic development and growth projections, Prof Shamsul said.
In recent programme at her official residence Gonobhobon, Prime Minister Sheikh Hasina said that it was her conviction that Bangladesh could become a middle-income country by 2021.
In the ongoing 2015-16 fiscal year, the DFID is providing $300m in development grants to Bangladesh. Under its global development programme, the UK agency has decided to provide $16bn assistance.
