ECN202

Assignment
Topic:
Macroeconomic
Overview of
Bangladesh

Course: Principles of Macroeconomics, Course Code: ECN202

Section: 07, Summer’2021

Submission date: August 25, 2021

Submitted to

Khwaja Saifur Rahman

Lecturer A (Equivalent to Senior Lecturer)
School of Business and Entrepreneurship (SBE)
Independent University, Bangladesh (IUB)

Submitted by

Farhan Eshraq Jeshan

1720446

The Economic Overview of Bangladesh And India:

Bangladesh: Bangladesh is a developing country in the South Asia. Agriculture is the main
source of the income of the country. The Gross Domestic Product (GDP) is hovering around 6%
for the last decade. Migrated labour and send remittance are increasing gradually. Debt burden of
the Government is increasing over time due to increase in budget deficit. Among the various
obstacles Bangladesh is advocating for poverty reduction by means of improving the quality of
education and promoting gender equality. According to world Bank the total GD of 2021 FY
$353billion and GDP rank 37th .GDP growth
7.9%(17&18)FY,8.2%(18&19)FY,5.2%(19&20f)FY,6.8%(20&21f)FY. Per Capita GDP
%5,812(2021FY) and inflation 5.5% .Overall unemployment rate 4.2%.Most demanding sector
for GDP is service sector and the rate is 5.6%.

India: Indian economy is middle income developing market economy. Among rankings it placed
sixth for economy by nominal GDP and 3RD largest by purchasing PPP (Purchasing Power
parity). According to IMF India ranked 14TH by per capita GDP. After growing at very high
rates for years, India’s economy had already begun to slow down before the onset of COVID- 19
pendemic. Between FY17 and 20, growth decrease from 8.3% to 4% with weakness in financial
sectors. In response of the recent pandemic the Gotland Indian Reserve Bank took several
monetary and fiscal policy to support vulnerable firms Ans households. For this proactive
measure, the economy is expected to rebound with a strong base effect materializing in FY22 . It
is expected that the growth rate will increase 6-6.5%. Unemployment rate of India in 2021 is
7.6%According to RBI (Reserve Bank of India) the forecasted inflation rate for 2021FY is 5.1 to
5.5%and it is expected that ongoing economic slack to temper inflationary pressure over the
medium term.
GDP: economic increase method increase in actual GDP an increase in the price of countrywide
output, profits and expenditure. As we see from underneath graph Bangladesh has greater GDP
increase than India. High GDP method better the dwelling standards. Higher actual profits will
increase the ability to dedicate greater assets to regions like health care and education. In 2010
Bangladesh has 5.5% GDP growth rate when India has 8.5% but after 2010 India faced gradual
decrease in their growth rate. On the other hand, Bangladesh experienced a steady growth to
their GDP. India has a negative growth rate which is -7.9% its can be caused for Coved- 19.
Though Bangladesh have fallen their growth rate to 5.24%.

Inflation: Inflation occurs when there is a sustain increase in general price level. High inflation
rate can damage an economy. It creates uncertainty and can wipe away the value of savings. In
2010 Bangladesh & India has inflation rate 7.14 &11.99 respectively. Low inflation rate can
have various advantages to the

economy. Inflation is better than deflation because moderate inflation allows adjustment of price
real wages. Low inflation has temerities also like it can cause recession in the economy also fall
in values of wages. In comparison between this two countries India has higher inflation rate than
Bangladesh which is not acceptable for a country. India can face a discouragement in the
investment and long-term economic growth because of high inflation it also can reduce the value
of savings. Inflation is good at a certain stage and the expected rate is 2%.In 2020 these two
middle east countries has5.65%&6.2% respectively .In a normal since its seems that India has
higher inflation than Bangladesh but This country is trying hard to maintain its inflation rate and
they reduce their rate 6% from 12% in the time 2010 to 2020. Bangladesh has to grip their
increasing trends of inflation rate otherwise it caused a decline in living standards especially in
low wage, zero hours contract jobs.

Unemployment The unemployment rate is the portion of unemployed persons

In the labour force. It adversely affects the disposable income of families, purchasing power and
reduce an economy’s output. Higher unemployment rates impact negatively on the long run
economic growth. Unemployment wastes resources, increases poverty.
From the above graph it can be shown that Bangladesh and India have a slow growth rate from
2021 to 2018.But in 2019 to 2020 both countries faced increasing trends in their unemployment
rate. This increasing trend cause problem for both countries because unemployment can slow
down economic growth rate, increases poverty, limits labour mobility and promote social unrest
and conflict. Both countries should take steps for reducing unemployment rate to decrease
distress from young generation.

Trade in BANGLADESH:

Bangladesh is found in Southern Asia, bordering the Bay of Bengal, between Myanmar and
India. The country has practised fast economic process in recent years chiefly driven by exports
of readymade-garments and remittances from migrant workers. The country is diversifying its
export base in terms of merchandise and destinations while tapping into its vibrant private sector
and enormous pool of cheap labour. Asian nation’s major export item is readymade-garments et
al. embrace shrimps, jute, animal skin merchandise and tea. Main export destinations are the us
and therefore the EU.
In 2018 Bangladesh faced the 2nd largest trade deficit in the history of the country. The trade
balance was -20.69. This happens when the country does not properly balance its saving and
investments. Bangladesh mostly has a trade deficit as the country imports more than exports. But
over the time exporting has increased. The graph below shows the Trade Rate of Bangladesh for
the past year.

Source: World Bank

Bangladesh’s export:

The term refers to the distribution of commodities or services manufactured in one kingdom to
another kingdom in order to meet their requirements. It refers to goods and services produced in
one country and acquired by a country in another for the purpose of satisfying there.
Bangladesh’s export economy is dominated by RMG manufacturing. They also export home
textile products, leather and leather goods, leather and leather goods, fish and shrimp, and
pharmaceuticals.

Bangladesh’s Imports:

Bangladesh is a South Asian country and eighth-maximum populous country with inside the
world. Based on Bangladesh import records, Bangladesh’s imports about valued USD 50 billion
in 2019. Globally speaking, Bangladesh stood at 18th function in imports. Bangladesh’s main
imports are cotton, machinery, mineral fuels & oils, electric machinery & equipment, iron &
steel, plastics, vehicles, man-made staple fibres, animal or vegetable fats & oils and cereals.
Bangladesh alternate records additionally famous listing of Bangladesh’s top import companions
as follows China, India, Singapore, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Brazil
and Kuwait.
Trade in India:

It is presently the sixteenth biggest product export economic system in the world. India has a bad
change stability of $166 billion in 2018. This is because of the extent of general product imports
amounting to $492 billion, along the overall export extent of $326 billion.

India’s exports:

India change elevated to $142.1 billion in items and offerings in 2018 towards a backdrop of
Indian GDP increase of 7.1 percentage and declining general degrees of world change volumes.
The United States remained certainly considered one among India’s biggest buying and selling
partners, with exports of U.S. items and offerings to India reaching $58.nine billion, and imports
from India hitting $83.2 billion. The United States additionally remained India’s pinnacle export
marketplace, at the same time as India become the twelfth largest export marketplace for U.S.
items in 2018. Despite profits in our bilateral change, there exists great ability to in addition
boom our change. India’s $24.2 billion change surplus with the US is its biggest with any
country. They are main exports are:

1. Mineral fuels including oil

2. Gems, precious metals

3. Pharmaceuticals:

4.Machinery including computers

5.Organic chemicals

6.Electrical machinery, equipment

7.Vehicles

India’s imports:

In 2020-21, Indian imports have been valued at $388.92 billion, an 18-percentage drop from
2019-20, whilst the country imported items and offerings worth $474.seventy-one billion. In the
final economic year, Indian exports stood at $290.18 billion, down 7. four percentage from
$313.36 billion in 2019-20. In India’s overseas trade, imports have continually outpaced exports,
a truth illustrated with the aid of using those figures from the beyond years. Widespread financial
disruptions resulting from Covid-19 in 2020 did now no longer change this reality. The main
imports are-

1.Crude petroleum. Crude petroleum was India's top import in 2020-21. ...

2.Gold

3.Petroleum products

4.Coal, coke and briquettes

5.Pearl, precious and semi-precious stones. ...

6.Electronic components

7.Telecom instrument

COMPARISON

In 2019, India ranked forty-four with inside the Economic Complexity Index (ECI 0.59), and 15
in general exports ($330B). That identical year, Bangladesh ranked 122 in the Economic
Complexity Index (ECI -1.01), and 52 in general exports ($47.2B).