Bangladesh is slated to become the 20th largest economy in the world out of 192 countries by the year 2038, according to a London-based think tank Centre for Economics and Business Research (CEBR).
The latest findings were disclosed in CEBR's annual World Economic League Table (WELT 2024) report where the think tank forecasts that the annual rate of GDP growth will accelerate to an average of 6.8% between 2023-24 and 2027-28, before slowing to an average of 6.2% per year over the subsequent decade.
Moreover, the next 15 years are set to see Bangladesh climb rapidly up the rankings of the World Economic League Table.
CEBR also forecasts that Bangladesh’s position will move from 37th in 2023 to 20th in 2038, a sizable 17-place improvement in the rankings.
The think tank forecasted economic growth in 192 countries in its WELT 2024 report.
Earlier, the think tank predicted that Bangladesh would become the 20th largest economy by 2037 in its WELT 2023 report and would be the 24th largest economy by 2036 in its WELT 2022 report.
As of 2023, Bangladesh is estimated to have a PPP-adjusted GDP per capita of $8,673 and is classified as a lower-middle-income country.
Following the expansion of the economy by 7.1% in the fiscal year 2021-22, growth is expected to have moderated to 6% in 2022-23, leaving output 25.6% above pre-pandemic levels, the report added.
The deceleration in growth in 2022-23 was driven by a contraction in industrial activities, primarily driven by subdued export demand from advanced economies.
A sharp depreciation in the currency (taka), coupled with upward revisions in fuel and energy prices in the domestic market, led to a significant rise in production and transportation costs. This, in turn, contributed to a rampant increase in consumer prices.
In 2023, inflation is estimated to have reached 9%, a considerable uptick on the average inflation rate observed in the ten years leading up to 2021, which stood at 6.3%.
In response to the inflationary pressures, the Bangladesh Bank, the country’s central bank has continued to adhere to a tight monetary policy stance, by increasing the policy rate to 6.5%.
Notably, there has been a paradigm shift in the overall monetary policy framework over the past year in Bangladesh, transitioning from a monetary targeting framework to an interest rate targeting framework.
According to the report, this shift is accompanied by a commitment to a unified market exchange rate, departing from the managed floating exchange rate system that had been in operation since May 2003.
This system included differential rates for exports, imports, and remittances.
These policy changes are linked to the country's participation in the IMF program initiated at the beginning of the year.
Government debt as a share of GDP rose to an expected 39.4% in 2023. This is up from 37.9% in 2022.
The government operated a rather high fiscal deficit in 2023, at an estimated 4.5%, facilitated in part by the low debt-to-GDP ratio. This will have acted to bolster the economy in the past months, said the report.
Regarding the US, CEBR said that the US economy was sustaining growth but only at the cost of borrowing and continuing to plan to borrow.
The scale of the Eurozone problem is similar to that in the US, with the Eurozone position complicated by the fact that political integration within the zone is much less advanced than the level of financial integration.
Regarding China, it said that the Chinese problems are different in type since they originate in the property sector rather than in government. Chinese property developers are sitting on large losses after years of debt-fuelled expansion.
Regarding India, the think tank said that India is set to become the world's third-largest economy by 2032.
CEBR also said that it has recently become commonplace to claim that the world economic outlook has become more uncertain than usual. Perhaps uncertainty is the new “normal”.
“Yet, our short-term global forecasts in recent years have been surprisingly accurate, though our medium-term forecasts were less so,” the research firm added.
