Investments in health and education will likely boost Bangladesh’s productivity, according to a research by the multinational bank
With a sustainable GDP growth rate of 7%, Bangladesh is among the seven countries in the world that are expected to dominate world economy in the coming decade, says Standard Chartered Bank.
By 2030, Bangladesh’s per capita GDP is projected to be $5,700, surpassing India’s per capita GDP of $5,400, according to a research note from the multinational bank’s India-based Head of Thematic Research, Madhur Jha, and Global Chief Economist, David Mann.
The demographic dividend will be a boon for India, while Bangladesh’s investments in health, and education should juice productivity, the analysts said.
In 2018, Bangladesh was behind India in terms of per capita GDP, with $1,600 compared to India’s $1,900, the research data shows.
India is also expected to maintain growth rates of around 7%, Bloomberg reported.
Besides Bangladesh and India, Vietnam, Myanmar, and the Philippines are also the members of the exclusive “7% club.” The other two are from Africa – Ethiopia, and Côte d’Ivoire.
Vietnam tops the list of the seven countries, with its per capita GDP expected to soar to $10,400 in 2030, from about $2,500 in 2018.
The Southeast Asian members of the group should be GDP standouts, as they will together account for about one-fifth of the world’s population by 2030, Jha and Mann reckon.
The Asian dominance of the list is a change from 2010, when the bank first started tracking the economies it expected to grow by around 7%.
Back then, there were 10 members evenly split between Asia and Africa: China, India, Indonesia, Bangladesh, Vietnam, Nigeria, Ethiopia, Tanzania, Uganda, and Mozambique.
China is notably missing in the latest ranking after being a member of the club for almost four decades — reflecting both a slowdown in economic growth, and a progression toward higher per-capita incomes, that makes faster growth rates more difficult to sustain.
The Standard Chartered Bank report estimates that the world’s No 2 economy will keep up a 5.5% economic growth pace in the 2020s.
Sub-Saharan African countries also have faded, which Jha and Mann attribute to “waning reform momentum, despite a slowdown in commodity prices.”
While faster economic growth is not a solution to all the problems, it does have a lot of positive knock-on effects, Jha and Mann said.
“Faster growth not only helps to lift people more quickly out of absolute poverty, but is also usually accompanied by better health and education, as well as a wider range of — and better access to — goods and services,” they say in the report. “Higher incomes resulting from faster growth also usually reduce socio-political instability and make it easier to introduce structural reforms, creating a virtuous cycle.”
In addition, 7% club members tend to have savings and investment rates of at least 20-25% of GDP, according to the report.