Principles of Macroeconomics

Section: 2
Submitted To
Shamil M Al-Islam
Department of Economics

Submitted By
Mashrafi Rahman Nadvi
ID: 1922127
Introduction:

This report presents us the macroeconomic comparison between Bangladesh and Pakistan. We
will be focusing on the GDP, inflation, Unemployment rate, trade among, money supply, CPI
and exchange rate countries. Bangladesh was liberated in 1971 from Pakistan. Whereas Pakistan
was born in 1947. For our economic comparison we will be focusing on data from 2010 years.
Bangladesh having a land mass of only 147570 sq.km has a population of around 166 million
people. But Pakistan having a land mass of around 881,913 sq.km has a population of 212.2
million. As a result, the density of population is much lower in Pakistan compared to
Bangladesh.

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GDP:

The full form of GDP is Gross Domestic Product. GDP is calculated by calculation total
monetary value of goods each year within a country. It helps us measure the size of an economy
and the economic wellbeing.

Initially in 2010 Bangladesh became 5.51% of GDP annually. On the other hand, Pakistan
accounted for 1.60%% of GDP annually in 2010. We can see in chart that next nine years,
Bangladesh is increased its GDP annual than Pakistan.

The GDP rank is 35th in the world. GDP on PPP (Purchasing Power Priority) is 865 billion
dollars which is ranked 29th in the world. After independence Bangladesh maintained a 5%. GDP
growth over the years. The GDP rank is 40th in the world. GDP on PPP (Purchasing Power
Priority) is 1080 billion dollars which is ranked 22nd in the world.

GDP
9
8
7
6
5
4
3
2
1
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

BD PAK

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Inflation:

Inflation is the annual change of price per unit of goods. Inflation helps us to understand the cost
of living and the economic development of a country.

Initially in 2010 Bangladesh became 9.37%% of inflation rate. On the other hand, Pakistan
accounted for 10.10% of inflation rate in 2010. We can see in chart that next two (2011,2012)
years, Pakistan is increased its inflation rate than Bangladesh. In the history of Bangladesh, it
never faced hyperinflation. In 2013 Bangladesh faced an inflation of 7.54%. But in 2014 it
decreased to 7.01%. In 2015 it again decreased to 6.41% and decreased to 5.92% and 5.44%
respected to 2016 and 2017. The rate of inflation was 5.78% in 2018. Finally, the rate of inflation
was 5.48% Bangladesh faced an inflation of all time high in 2011 at 11.46%.

Though the inflation rate of Pakistan averaged 7.58% in the last ten years, but it was not like this
forever. Pakistan has always tried to control its inflation. But most of the time it could not
succeed. Most of the time the inflation rate in Pakistan, it was higher than 13.66% in 2011. In
2012 Bangladesh faced an inflation of 11%. But in 2013 it decreased to 7.36%. In 2014 it again
increased to 8.62% and decreased to 4.53% and 2.86% respected to 2015 and 2016. The rate of
inflation was 4.15% in 2017. But in 2018 it decreased to 3.93%. Finally, the rate of inflation was
6.74% Bangladesh faced an inflation of all time high in 2019 at 6.74%.

Inflation Rate
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

BD PAK

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Unemployment Level/ Unemployment rate:

The unemployment rate is defined as the percentage of unemployed workers in the total labour
force. Workers are considered unemployed if they currently do not work, although they are able
to and willing to do so. The total labour force consists of all employed and unemployed people
within an economy. We can see in chart that next ten years, Bangladesh is increased its
unemployment total than Pakistan

Bangladesh has one of the work forces in the world thanks to it relatively large young
population. But the labour force participation is only 59%. Despite a huge labour force
Bangladesh has a relatively low unemployment level. From 2010 to 2019 Bangladesh has
maintained an unemployment rate of less than 5% which is astonishing considering it is an
underdeveloped country. The highest unemployment rate was 4.43% which was in 2013. But for
the last 10 years the unemployment rate is a steady 4.2%. Pakistan having a population of 212.2
million people is a very big country. As a result, the labour force of Pakistan is also huge. The
total number stands at 57.2 million. From 2010 to 2019 Pakistan has maintained an
unemployment rate of less than 1% which is surprising considering that the country faces many
problems including political and terrorism. But from 2012 it has been increasing gradually. The
highest unemployment rate was 4.08% which was in 2018. Though it has increased the
unemployment rate is less than 5%. In 2019 the country has an unemployment rate of 3.98%.

Unemployemnt tota

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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Trade (Export & Import):

Both Bangladesh and Pakistan are an open economy country. As a result, the countries have
trading relations with other countries.

The total export and import of Bangladesh were 46.36 billion and 64.85 billion in 2019. The top
exports of Bangladesh are Non-Knit Men's Suits, Knit T-shirts, Knit Sweaters, Non-Knit
Women's Suits, and Non-Knit Men's Shirts. The top imports of Bangladesh are Refined
Petroleum, Raw Cotton, Heavy Pure Woven Cotton, Light Pure Woven Cotton, and Non-Retail
Pure Cotton Yarn. Bangladesh exports mostly to Germany, United States, United Kingdom,
Spain, and France, and imports mostly from China, India, Singapore, Malaysia, and Indonesia. In
2010 the trade deficit of Bangladesh was -6.63 billion. Bangladesh trade balance for 2011 was at
a deficit of -9.74 billion. Bangladesh trade deficit for 2012 was -10.38 billion. Bangladesh trade
balance for 2013 was -10.83 billion. Bangladesh trade balance for 2014 was at a deficit of -11.29
billion. In 2015 the trade deficit of Bangladesh was -14.46 billion. Bangladesh trade balance for
2016 was at a deficit of -10.31 billion. Bangladesh trade deficit for 2017 was -13.06 billion.
Bangladesh trade balance for 2018 was -23.69 billion. Bangladesh trade balance for 2019 was
at a deficit of -18.50 billion.

Net export
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-5

-10

-15

-20

-25

-30

-35

-40

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The total export and import of Pakistan were 28.15 billion and 56.53 billion in 2019. The top
exports of Pakistan are House Linens, Rice, Non-Knit Men's Suits, Non-Retail Pure Cotton Yarn,
and Heavy Pure Woven Cotton. The exports were mostly to United States, China, Germany,
Afghanistan, and United Kingdom. The top imports of Pakistan are Refined Petroleum, Crude
Petroleum, Petroleum Gas, Palm Oil, and Scrap Iron, importing mostly from China, United Arab
Emirates, Saudi Arabia, United States, and Indonesia. In 2010 the trade deficit of Pakistan was
-10.34 billion. Pakistan trade balance for 2011 was at a deficit of -10.69 billion. Pakistan trade
deficit for 2012 was -17.97 billion. Pakistan trade balance for 2013 was – 15.67 billion. Pakistan
trade balance for 2014 was at a deficit of -15.67 billion. In 2015 the trade deficit of Pakistan was
-17.44 billion. Pakistan trade balance for 2016 was at a deficit of -19.55 billion. Pakistan trade
deficit for 2017 was -28.44 billion. Pakistan trade balance for 2018 was - 34.92 billion. Pakistan
trade balance for 2019 was at a deficit of -28.38 billion.

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Exchange rate:

An exchange rate is the value of a country's currency vs. that of another country

or economic zone. Most exchange rates are free-floating and will rise or fall based on supply and
demand in the market.

Initially in 2010 Bangladesh became 69.65 exchange rate. In 2011 Bangladesh faced an
exchange rate in 74.15. Again, next year Bangladesh became 81.86 in exchange rate. But in 2013
it decreased to 78.10. Again, next two year it decreased to 77.64 and 77.95 in respectively in
exchange rate. Suddenly in 2016 it increased to 78.47. We can see chart that it became increasing
from 2017 to 2019.

Initially in 2010 Pakistan became 85.19 exchange rate. In 2011 Pakistan faced an exchange rate
in 86.34 Again, next year Pakistan became 93.40 in exchange rate and in 2013 it increased to
101.63. Again, next two year (2014,2015) it increased to 101.10 and 102.77 in respectively in
exchange rate. Suddenly in 2016 it increased to 104.77. We can see chart that it became
increasing from 2017 to 2019 which was amount of 105.46, 121.82 and 150.04 in respectively to.

Exchange rate
$160.00

$140.00

$120.00

$100.00

$80.00

$60.00

$40.00

$20.00

$-
-10.34 -10.69 -17.98 -15.67 -15.68 -17.44 -19.55 -28.44 -34.92 -28.38

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Money Supply:

Money supply is another name is Board Money. The money supply is the total amount of money
cash, coins, and balances in bank accounts in circulation. The money supply is commonly
defined to be a group of safe assets that households and businesses can use to make payments or
to hold as short-term investments.

Initially in 2010 Bangladesh became 21.07% of Money Supply. In 2011 Bangladesh faced a
money supply of 16.91%. Again, next year (2012) Bangladesh became 17.01% of money supply.
But in 2013 it decreased to 14.84%. Suddenly in 2014 it increased to 15.61%. But it decreased to
14.89% in 2015. Again in 2016, it increased to 16.69 and it decreased to 13.73% in 2017. Next
two year (2018 and 2019) it decreased to 11.50% and 11.90% in respectively in money supply.

Initially in 2010 Pakistan became 14.56% of Money Supply. In 2011 Pakistan faced a money
supply of 12.60%. Again, next year (2012) Pakistan became 17.39% of money supply. But in
2013 it decreased to 13.31%. Suddenly in 2014 it decreased to 11.54%. But it increased to
12.18% in 2015. Again in 2016, it increased to 13.61 and it decreased to 9.93% in 2017. Next
two year (2018 and 2019) it decreased to 9.83% and 11.67% in respectively in money supply.

Money Supply (%)

25

20

15

10

0
$85.19 $86.34 $93.40 $101.63 $101.10 $102.77 $104.77 $105.46 $121.82 $150.04

BD PAK
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Consumer price index:

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a
basket of consumer goods and services, such as transportation, food, and medical care. It is
calculated by taking price changes for each item in the predetermined basket of goods and
averaging them.

Initially in 2010 Bangladesh became 100 CPI. In 2011 Bangladesh faced a CPI in 111.39. Again,
next year Bangladesh became 118.32 in Consumer price index. We can see chart that it became
increasing from 2013 to 2019.

Initially in 2010 Pakistan became 100 CPI. In 2011 Pakistan faced a CPI in 111.91. Again, next
year (2012) Bangladesh became 122.75 in Consumer price index. We can see chart that it
became increasing from 2013 to 2019.

CPI (Consumer Price Index,2010 = 100)

200
180
160
140
120
100
80
60
40
20
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

BD PAK

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Conclusion: Although both Bangladesh and Pakistan are a young country. Bangladesh was born
almost 20 years later. But Bangladesh heads forward in almost all category. From GDP to trade
Bangladesh surpasses Pakistan and almost all other south Asian countries. This has been possible
because of strict economic policy, corrective measures in times of need and utility maximization
of every dollar spend. Both the countries have come a long way from where it started but it even
has a long road ahead which will take them to become developing and as well as developed
country. This will only be possible with correct economic policy and measures.

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Reference
bank, a. d. (2021, April 26). Economic indicators for Bangladesh. From Economic indicators for
Bangladesh: https://www.adb.org/countries/bangladesh/economy

focus-economics. (2021, april 27). From focus-economics: https://www.focus-

economics.com/countries/pakistan

GIBSON, T. (1982). Economic Growth and Equity. ISEAS - Yusof Ishak Institute, 174-183 .

Nazar, Y. (2021, April 26). Dawn. From Dawn: https://www.dawn.com/news/1579562

Rajapaksa's, M. (2021, April 27). the economist. From the economist: http://country.eiu.com/Sri
%20Lanka

World bank. (2021, April 26). From World bank: https://data.worldbank.org/

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