Introduction

Bangladesh is a poor developing country in South Asia and is moderately interlinked with
the global economy especially since the various internal and external reforms were carried
out in the 1990s. Bangladesh, though not so much globalized financially, depends a
significantly on foreign trade. More significantly, its exports including readymade garments,
shrimps, leather, etc are heavily dependent on the western consumer demand. Therefore,
falling employment and hence the declining income of the average consumers in the USA
and Europe are likely to have serious impacts on her export potentials. Also there are
concerns with respect to fall in remittance income. Against this backdrop this research
explores the possible impacts of the current global economic crisis on Bangladesh in an
economy-wide modeling framework.
Global Economy
Global economy is the economy of the world, considered as the international exchange of
goods and services that is expressed in monetary units of account (money). In some
contexts, the two terms are distinguished: the "international" or "global economy" being
measured separately and distinguished from national economies while the "world economy"
is simply an aggregate of the separate countries' measurements.
Bangladesh Economy
The Economy of Bangladesh is the 32nd largest in the world by purchasing power parity
and is classified among Next Eleven emerging market economies in the world. According to
IMF, Bangladesh's economy is the second fastest growing major economy of 2016, with a
rate of 7.1%.
Throughout last decades, Bangladesh averaged a GDP growth of 6.5%, leading the country
to becoming an export-oriented industrialisation. In recent years, Bangladesh have seen a
major surge in export as Bangladesh textile industry, second largest in the world, along with
emerging Pharmaceutical, Defense, and IT industry. The country's exports are projected to
cross US$50 billion by 2021. The figure shows a constant GDP growth of Bangladesh

World Economy of Growth Scenario

Source: Finance Division

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whereas some developed country hasn't such growth like us.

Impact on Bangladesh Economy

In order to understand the impact of the global economy on the economy of Bangladesh it is
important to identify the channels through which the economic impact is likely to have. As
pointed out earlier, the impact via the financial channel is likely to be minimal given
Bangladeshs weak financial integration with the global economy. It appears that export and
remittance are the two major channels through which Bangladesh economy is being affected
by the global economy. Therefore, a detailed analysis of these two channels warrants much
importance.
The act or process of growing or causing something to grow or become larger or more
advanced or the act or process of creating something over a period of time or the state of
being created or made more advanced .

Export
When the global economy had been deepened with crisis, there was a consequent slump in
developed country demand for exported goods from developing countries. Bangladeshs
export performance during fiscal years 2009 and 2010 also experienced slow growth. The
growth of exports during fiscal year 2009 was a respectable 10.3 percent . However, this
growth rate was much lower than the high growth rates of 15.6 percent and 15.9 percent in
the previous two fiscal years. The major contribution to the moderate positive growth rate
came from decent performance of apparels export, which contributes about three-quarters of
total export earnings. The growth rates of woven and knit RMG (readymade garments)
exports were 13.2 percent and 17.4 percent respectively, compared to the previous fiscal
year (2007-08). In contrast, some sectors, such as leather, other crops, shrimp and fishing
experienced significant fall in exports. However, during fiscal year 2010, when the world
economy had been experiencing the aftermath of the economic crisis, exports from
Bangladesh encountered a very low growth rate (4.1 percent), lowest in the last two
decades. Both Woven and Knit RMG exports registered extremely low growth rates, 1.6
percent and 0.84 percent respectively. However, exports of other crops, shrimp and fishing,
leather and other industry increased with considerably high growth rates. It thus appears that
during this period, mostly the high growth in non-RMG exports contributed to maintaining
a positive growth in total exports in the face of very low growth rates in exports of woven
and knit.

Ready Made Garments

Readymade garments (RMG) industry is one of the premier industrial sectors to the
economy of Bangladesh. RMG industry of Bangladesh which includes knitwear (T-shirt,
Undergarments etc.) and woven garments (Shirt, trouser, sweater etc.) along with
specialized textile products, is the nation's number one export earner, accounting for 80% of
Bangladesh's exports of US $ 19090 million in 2012 (BGMEA 2012). This industry has
been leading the Bangladesh economy since the 1990 due to having cheap labor, less
complicated technology and low-priced machinery . Global economic crisis which incepted
in the United Stated of America (USA) in 2007 and afterward reached around the world had
profound effect on the economy of Bangladesh having political and economic relationship
with many countries all over the globe from USA, EU, Japan, China, Brazil, India and
South Africa to the countries of South East Asia (World Bank 2009).The global economic
crisis had some significant implications for the economy of Bangladesh. Because the sharp
contraction in international trade activities brought most of the export activities down
consequently, the impact on exports in both the value and volume of some major export
categories experienced negative growth rates during 2008 and 2009 (Rahman et al
2009).The effect of global financial crisis of 2008-09 on Bangladeshs economy was limited
and remains in some major sectors like export, remittance and financial sectors but the
impact was nominal in the major RMG sector of Bangladesh (Ali et al 2011). Export sector
of Bangladesh is mainly dominated by RMG .Therefore any danger to this sector will
hamper the economic foundation of Bangladesh. RMG sector of Bangladesh could be
benefitted due to global recession as the exports of Bangladesh are almost entirely consumer
goods whose demand did not fall as harshly as earnings. Bangladesh export market was
highly concentrated in a few rich countries, exceeding 90% of total export earnings derived
from the U.S. and the EU, 75%, most of which derived from the ready-made garments the
country leading employer. So, the impact of recession would be severe . Bangladesh might
not be affected that much at all, at least in the short run, where the ultimate impact on
growth depends largely on how long the recession lasts and the depth and severity of the
effects globally .
Remittance
The inflows of remittance rebounded and increased by 7.65 percent in FY 2014-15,
amounting to US$15,316.90 million, compared with the negative growth of 1.61 percent a
year earlier. The increased of overseas employment, especially in middle-eastern countries,
was the main reason for higher remittance inflows. In FY 2014-15, 4,61,829 workers went
abroad for jobs, up by 12.95 percent in the previous year. In FY 2014-15, remittance
inflows from Saudi Arabia increased by 7.23 percent, UAE by 5.17 percent, USA by 2.45
percent, Qatar by 20.47 percent, Oman by 30.55, Singapore by 3.33 percent, Bahrain by
20.66 percent and Malaysia by 29.75 percent. On the other hand, remittance inflows from
Kuwait decreased by 2.63 percent and UK by 9.86 percent.
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The following figure shows us the export scenario of manpower in 2015.

Manpower Export scenario, Source: Finanace Division

The following figure shows the remittance earned by Bangladesh. For political unrest in
Arab has a negative impact on our remittance earned. But now Bangladesh almost
overcome this crisis.

Source: Finance Division

After long six years, Saudi Arabia has re-opened its labour market for Bangladeshi workers,
which indicates future growth prospects for manpower export. The ongoing initiatives to
expand employment opportunities in the traditional markets, diplomatic efforts to explore
new destination, provision of cheap credit to the expatriate workers and measures to
improve skills labour force to meet the demand of overseas labour markets will continue.
Economic Growth
Bangladesh has maintained sustainable economic growth, despite the ongoing crises of
global economic recovery and the adverse affect emerged from the domestic front. The
economy grew at an average rate of 6.19 percent over the last decade (FY 2005-06 to FY
2014-15).
The following figures shows the GDP growth of Bangladesh.

Source: BBS
So we can understand from the figure that GDP growth has a relation with the world
economy as there is a global economic crisis during 2007-2009 but Bangladesh can
overcome it quickly and maintained sustainable growth.
Conclusion
Bangladesh has made impressive economic and social progress towards achieving some of
the Millennium Development Goals (MDGs), despite repeated natural disasters and external
shocks. Bangladesh has met the MDGs for gender parity in education and has made
impressive progress towards achieving universal primary enrolment. So it is so much
important for us to have a better economic strength. The overall GDP and major segments
such as manufacturing, agriculture, financial and capital markets, exports, remittances,
international reserves and exchange rates have shown remarkable resilience and must
continue to grow, but at a somewhat slower pace.
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