Overdependence on readymade garment (RMG) exports could be a major barrier to sustaining the country's economic growth in the next 10 years, said a report.
The report, titled "Bangladesh Economic Update-2022," published by Lightcastle Partners, said that the upcoming few years would be monumental as Bangladesh will finally transition out from the least developed country (LDC) status in 2026.
LightCastle Partners, a business consulting firm creating data-driven opportunities for growth and impact, unveiled the report at the end of September 2022.
It said that fresh challenges will emerge as the country will cease to benefit from various trade benefits accrued to the LDCs.
It suggested the government provide policy support and facilitate investments for diversifying the export basket.
Economists are predicting a gradual reversal of trade liberalization as the geopolitical fault lines are increasingly becoming more pronounced, leading to de-globalization, the report noted.
It suggested policymakers undertake a series of policy reforms and reduce red-tape, mainly aiming to facilitate ease of doing business.
International investors will have to be wooed to enter the country, which will not only create new jobs but also facilitate technology transfer, and help the country transition toward an innovation-led economy, it said.
The demographic dividend the country is experiencing will cease to exist within the next couple of decades and the government has to facilitate employment opportunities for 2.2 million entering the job market per year, the report said.
Large scale investment in education will also be required for improving the overall skill-set of the working population and contribute to growing human capital, it added.
A notable percentage of the economically vulnerable population has slid back to poverty, it said.
It said the economic landscape of the country has transformed towards industrialization, urbanization, and technology adoption.
Compared to the previous decades, the export basket has diversified with the addition of consumer durables, mobile phones, active pharmaceutical ingredients, software, frozen fish, marine vessels, and agricultural products.
The country is now highly integrated into the global supply chain for both imports and exports for such diversification, it added.
Russia's invasion of Ukraine has sparked a supply chain nightmare, leading to a halt in the recovery of the global economy and undermining the stability throughout the region and beyond, the report said.
Surging inflation is a result of war-induced increases in commodity prices and continued supply chain difficulties, it said.
In the short-and medium-term, the depleting foreign reserve has to be made a priority and adequate steps in maintaining a healthy reserve have to be explored continuously, the report said.
Disrupted supply chains as a result of the war have contributed to the increase in the cost of staple crops such as wheat, soybean, and other commodities, it said.
