Economy, Finance and Trade:

Bangladesh
Euromonitor International
March 2022
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LIST OF CONTENTS AND TABLES

HEADLINES ................................................................................................................................. 1
PROSPECTS ............................................................................................................................... 1
Strong exports and improving domestic demand to support economic growth in Bangladesh . 1
Bangladesh Bank maintains expansionary policy to support economic growth ........................ 2
Global demand for readymade garments to support export growth, yet competition with
members of A new trade bloc poses downside risks ................................................................ 2
Capital investment to be supported by implementation of major infrastructure projects ........... 2
Public finances were hit by the pandemic, yet public debt remains sustainable ....................... 3
ECONOMIC LANDSCAPE ........................................................................................................... 3
Chart 1 Economic Landscape of Bangladesh: 2021-2040 ........................................ 3
Chart 2 Real GDP Growth in Bangladesh: 2010-2040 .............................................. 4
Chart 3 GDP Size and Growth: 2016-2040 ............................................................... 4
Chart 4 Gross Value Added by Sector in Bangladesh: 2021 .................................... 5
Chart 5 Domestic Demand: 2021 and Period Growth 2016-2021 ............................. 5
Chart 6 Productivity: 2016/2021 ................................................................................ 6
Chart 7 Productivity by Sector in Bangladesh: 2021 and CAGR 2016-2021 ............. 6
MONETARY INDICATORS .......................................................................................................... 7
Chart 8 Monetary Landscape of Bangladesh: 2021 .................................................. 7
Chart 9 Inflation: 2010-2040...................................................................................... 7
Chart 10 Average Inflation: 2010-2040 ....................................................................... 8
Chart 11 Interest Rates in Bangladesh: 2010-2022 .................................................... 8
Chart 12 Exchange Rates: 2010-2021 ........................................................................ 9
Chart 13 Money Supply Growth and Money Velocity in Bangladesh: 2015-2022 ....... 9
FOREIGN TRADE ...................................................................................................................... 10
Chart 14 Foreign Trade Landscape of Bangladesh: 2021 ........................................ 10
Chart 15 Exports in Bangladesh: 2014-2021 ............................................................ 10
Chart 16 Exports by Commodity in Bangladesh: 2021 .............................................. 11
Chart 17 Top 10 Export Destinations: 2021 and Period Growth 2016-2021 ............. 11
Chart 18 Imports in Bangladesh: 2014-2021 ............................................................ 12
Chart 19 Imports by Commodity in Bangladesh: 2021 .............................................. 12
Chart 20 Top 10 Import Origins: 2021 and Period Growth 2016-2021 ...................... 13
INVESTMENTS .......................................................................................................................... 14
Chart 21 Investment Landscape of Bangladesh: 2020-2021 .................................... 14
Chart 22 FDI Intensity: 2020 ..................................................................................... 14
Chart 23 Foreign Direct Investment in Bangladesh: 2015-2020 ............................... 14
Chart 24 Gross Fixed Capital Formation in Bangladesh: 2010-2021 ........................ 15
GOVERNMENT FINANCE ......................................................................................................... 15
Chart 25 Government Budget Landscape of Bangladesh: 2021 ............................... 15
Chart 26 Public Debt: 2021 ....................................................................................... 16
Chart 27 Government Revenue: 2021 ...................................................................... 16
Chart 28 Government Expenditure: 2021 ................................................................. 17
Chart 29 Government Expenditure by Economic Type in Bangladesh: 2021 ........... 18
Chart 30 Government Expenditure by Function in Bangladesh: 2021 and
Period Growth 2016-2021 .......................................................................... 19

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ECONOMY, FINANCE AND TRADE:

BANGLADESH
Despite the negative impact of the pandemic, Bangladesh’s economy continued to grow in
2021. Over the medium term, accommodative monetary and fiscal policies, as well as the
expected progress in vaccinations are set to further support domestic consumption and capital
investment. Meanwhile, surging foreign demand for readymade garments is set to fuel higher
exports. Nonetheless, persisting pandemic-related risks and supply constraints raise uncertainty
and weigh on the country’s economic outlook.

HEADLINES
▪ Following real growth of 4.6% in 2021, Bangladesh’s economy is expected to expand at an
average annual real rate of 7.0% over 2022-2040
▪ The unemployment rate in Bangladesh is expected to rise slightly to 4.7% in 2022, yet to
remain below the average of 5.0% in Asia Pacific
▪ Inflation in Bangladesh is forecast to increase to 5.7% in 2022 from 5.5% in 2021
▪ While Bangladesh’s merchandise exports increased by 21.8% and imports rose by 38.4%
during 2021, the country remained a net importer
▪ As foreign direct investment (FDI) inflows into Bangladesh decreased over 2020, FDI intensity
reached 0.8% of GDP
▪ The public debt-to-GDP ratio in Bangladesh increased slightly to 39.9% of GDP in 2021, yet
remained considerably lower than the regional average of 95.0% in Asia Pacific

PROSPECTS

Strong exports and improving domestic demand to support economic

growth in Bangladesh
Following slower expansion of 3.5% in 2020 amidst the COVID-19 pandemic, economic
growth momentum in Bangladesh started to improve in 2021, with real GDP rising by 4.6%.
Despite the negative impact of prolonged COVID-19 containment measures, the country’s
economic performance was supported by robust exports, on the back of the global recovery and
soaring external demand for readymade garments. Improving domestic demand also
contributed to the positive economic development during the year, thanks to growing capital
investment and government spending. Furthermore, rising consumer incomes and soaring wage
earners’ remittance inflows supported an increase in private consumption. Over the short to
medium term, economic growth in Bangladesh is expected to strengthen further, thanks to the
anticipated progress in COVID-19 vaccinations, gradual recovery of contact-intensive sectors,
sustained agricultural activities and sound foreign demand for readymade garments. However,
persistent uncertainties over the duration of the COVID-19 pandemic and the possibility of new
infection waves, global supply chain disruptions, rising energy prices and the country’s
vulnerability to extreme weather events will be some of the major risks clouding the country’s
outlook.
Over 2022-2040, Bangladesh’s economy is forecast to expand at a CAGR of 7.0%,
substantially higher than the regional average of 4.2%. The construction and real estate, as well
as textile and leather industries are expected to remain the major contributors to the future

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economic development in Bangladesh. Over the next five years, turnover of these two industries
is forecast to soar by 50.5% and 47.7% (in 2020 constant prices), respectively.

Bangladesh Bank maintains expansionary policy to support economic

growth
Over 2021, the level of inflation in Bangladesh decreased slightly to 5.5% from 5.7% in the
previous year, despite the unprecedented expansionary monetary and fiscal policy measures
and globally rising inflationary pressures. Hence, CPI-based inflation stood just slightly above
the central bank’s target in 2021. Among major groups of consumer goods and services,
alcoholic drinks and tobacco products, food and non-alcoholic beverages, and communication
witnessed the largest price increases during the year.
Bangladesh Bank maintained an expansionary monetary stance in 2021, aiming to boost
investment activities, support job creation and retention, and provide sufficient supply of credit to
productive sectors (such as agriculture and manufacturing), in order to ensure economic
recovery against the backdrop of the COVID-19 pandemic. Following the reduction of the repo
rate to 4.75% and the reverse repo rate to 4.0% in 2020, Bangladesh Bank maintained them
unchanged during 2021. Furthermore, the central bank maintained its single-digit interest rate
regime, with the interest rate for all types of loans except credit cards capped at 9.0% since April
2020, in order to reduce the cost of borrowing and reinvigorate business activity.

Global demand for readymade garments to support export growth, yet

competition with members of A new trade bloc poses downside risks
Following a dip in 2020, the strong recovery in global demand boosted international
merchandise trade and the value of goods exported by Bangladesh rebounded by 21.8% over
2021. This growth was largely driven by surging exports of textiles and readymade garments (in
absolute value terms), which also remained the largest export category in Bangladesh,
accounting for 90.1% of the country’s total export value in 2021. Bangladesh Bank’s decision to
reduce interest rates on loans from the Export Development Fund (EDF, one of the key export
facilitating tools) from 2.0% to 1.75% in 2020 and to expand the EDF by 20% to BDT6 billion in
2021 has helped to support the recovery of Bangladeshi exporters and is set to fuel future
growth of exports. The US remained Bangladesh’s main export partner, with 17.5% of all goods
exported to the US during the year, followed by Germany and the UK.
In 2021, the value of merchandise imports in Bangladesh rose by 38.4% and is expected to
continue expanding on the back of reviving domestic demand, adding to the widening trade
deficit. Bangladesh mainly imports textiles, machinery and electronic equipment, mineral
products, food and transport equipment. China remained Bangladesh’s largest import partner in
2021, supplying nearly a third of all merchandise imported by Bangladesh in value terms.
In January 2022, the Regional Comprehensive Economic Partnership (RCEP) came into
force, creating a new Asia Pacific trading bloc between the 10 ASEAN (Association of Southeast
Asian Nations) countries, Australia, China, Japan, New Zealand and South Korea. As
Bangladesh stayed away from the agreement, the deal is expected to challenge the country’s
position in the regional market. According to the United Nations Conference on Trade and
Development (UNCTAD), some 12.0% of Bangladeshi exports to RCEP countries are expected
to be diverted to favour members of the trade bloc.

Capital investment to be supported by implementation of major

infrastructure projects
As greenfield investments and cross-border M&A activity declined amid the COVID-19
pandemic, global FDI flows witnessed a significant drop in 2020, reaching the lowest level since

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2005. According to Bangladesh Bank, total net FDI inflows into Bangladesh decreased year on
year in the financial year (FY) 2019-2020 (July 2019 - June 2020), dragged down by plummeting
equity capital flows and intra-company loans. Although inward investments started to show
signs of slow recovery in FY 2020-2021, total net FDI inflows remained relatively subdued due
to lingering uncertainties about the COVID-19 pandemic. During FY 2020-2021, power, gas and
petroleum, as well as manufacturing (in particular, textiles and garments, and food products
industries) were attracting some of the largest foreign equity capital inflows. Meanwhile, the
Netherlands, the US and Singapore were the top investing countries in Bangladesh in terms of
FDI equity capital flows.
Gross Fixed Capital Formation (GFCF) in Bangladesh rose in real terms over 2021, as a
result of economic recovery, fiscal stimulus measures and favourable financing conditions.
Infrastructure buildout in Bangladesh remained largely targeted at the energy sector and
transportation. Capital investment growth is set to be further supported by ongoing urbanisation
and the country’s ambition to gain the status of a developing country in 2026, following the
United Nations General Assembly’s resolution allowing the country’s graduation. The
construction of several infrastructure megaprojects, such as Dhaka Metro Rail, Dhaka Elevated
Expressway, Padma Multipurpose Bridge, Padma Rail Link, as well as Rooppur nuclear power
plant, and Rampal and Matarbari coal power plants, is scheduled to be completed in the
upcoming years. Moreover, the government’s efforts to spur the development of sectors other
than textiles and garments are expected to support both public and private capital investment.
For example, Bangladesh’s first industrial park for electrical and light engineering products
manufacturers in Munshiganj is scheduled for completion in June 2022 and is expected to bring
scattered producers under one platform. Nevertheless, ongoing supply chain bottlenecks, rising
energy prices and inflationary pressures across the globe could hamper investment growth over
the medium term.

Public finances were hit by the pandemic, yet public debt remains
sustainable
Due to the shortfall in government revenue and the implemented fiscal stimulus measures
aimed at mitigating the adverse impact of the COVID-19 pandemic on the economy, the
government ran a budget deficit over 2020, reaching 5.5% of total GDP. According to the Asian
Development Bank (ADB), the government of Bangladesh introduced stimulus packages worth
USD22.1 billion in the wake of the pandemic. Over 2021, public expenditure continued to grow
by 9.4%, while government revenues increased by 7.9%. As a result, the budget deficit
widened, reaching 5.9% of total GDP in 2021 and is expected to continue rising over the near
term, due to continuing pandemic-related spending.
Bangladesh’s public debt continued to grow in 2021, yet it remained relatively low compared
to other Asia Pacific countries. Over the year, the public debt-to-GDP ratio increased to 39.9%,
which was less than half the regional average of 94.7%. According to International Monetary
Fund (IMF) projections, public debt in Bangladesh is expected to remain sustainable over the
long term.

ECONOMIC LANDSCAPE
Chart 1 Economic Landscape of Bangladesh: 2021-2040

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Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/International Financial Statistics (IFS)/ International Labour Organization (ILO)/World Economic
Outlook (WEO)
Note: Data for 2022-2040 are forecasts

Chart 2 Real GDP Growth in Bangladesh: 2010-2040

Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/World Economic Outlook (WEO)
Note: Data for 2022-2040 are forecasts from the Euromonitor International Macro Model

Chart 3 GDP Size and Growth: 2016-2040

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Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/World Economic Outlook (WEO)
Note: Data for 2022-2040 are forecasts

Chart 4 Gross Value Added by Sector in Bangladesh: 2021

Source: Euromonitor International from national statistics

Chart 5 Domestic Demand: 2021 and Period Growth 2016-2021

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Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/International Financial Statistics (IFS)

Chart 6 Productivity: 2016/2021

Source: Euromonitor International from International Labour Organization (ILO)/Eurostat/national statistics

Chart 7 Productivity by Sector in Bangladesh: 2021 and CAGR 2016-2021

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Source: Euromonitor International from International Labour Organization (ILO)/Eurostat/national statistics

MONETARY INDICATORS
Chart 8 Monetary Landscape of Bangladesh: 2021

Source: Euromonitor International from national statistics

Chart 9 Inflation: 2010-2040

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Source: Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD/UN
Note: Data for 2022-2040 are forecasts

Chart 10 Average Inflation: 2010-2040

Source: Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD/UN
Note: Data for 2022-2040 are forecasts

Chart 11 Interest Rates in Bangladesh: 2010-2022

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Source: Euromonitor International from national statistics/OECD

Note: Data for 2022 are forecasts

Chart 12 Exchange Rates: 2010-2021

Source: Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD

Chart 13 Money Supply Growth and Money Velocity in Bangladesh: 2015-2022

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Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/International Financial Statistics (IFS)
Note: Data for 2022 are forecasts

FOREIGN TRADE
Chart 14 Foreign Trade Landscape of Bangladesh: 2021

Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/World Economic Outlook (WEO)/International Financial Statistics (IFS)

Chart 15 Exports in Bangladesh: 2014-2021

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Source: Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD/UN

Chart 16 Exports by Commodity in Bangladesh: 2021

Source: Euromonitor International from United Nations (UN)/International Merchandise Trade Statistics

Chart 17 Top 10 Export Destinations: 2021 and Period Growth 2016-2021

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Source: Euromonitor International from International Monetary Fund (IMF)/Direction of Trade Statistics

Chart 18 Imports in Bangladesh: 2014-2021

Source: Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD/UN

Chart 19 Imports by Commodity in Bangladesh: 2021

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Source: Euromonitor International from United Nations (UN)/International Merchandise Trade Statistics

Chart 20 Top 10 Import Origins: 2021 and Period Growth 2016-2021

Source: Euromonitor International from International Monetary Fund (IMF)/Direction of Trade Statistics

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INVESTMENTS
Chart 21 Investment Landscape of Bangladesh: 2020-2021

Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/International Financial Statistics (IFS)/UNCTAD

Chart 22 FDI Intensity: 2020

Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/International Financial Statistics (IFS)/UNCTAD

Chart 23 Foreign Direct Investment in Bangladesh: 2015-2020

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Source: Euromonitor International from national statistics/UNCTAD

Chart 24 Gross Fixed Capital Formation in Bangladesh: 2010-2021

Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund

(IMF)/International Financial Statistics (IFS)
Note: Data for 2022 are forecasts

GOVERNMENT FINANCE
Chart 25 Government Budget Landscape of Bangladesh: 2021

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Source: Euromonitor International from International Monetary Fund (IMF)/national statistics/World

Bank/Government Finance Statistics (GFS)/Eurostat

Chart 26 Public Debt: 2021

Source: Euromonitor International from International Monetary Fund (IMF)

Chart 27 Government Revenue: 2021

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Source: Euromonitor International from International Monetary Fund (IMF)/Government Finance Statistics
(GFS)/national

statistics/Eurostat

Chart 28 Government Expenditure: 2021

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Source: Euromonitor International from International Monetary Fund (IMF)/Government Finance Statistics
(GFS)/national statistics/Eurostat

Chart 29 Government Expenditure by Economic Type in Bangladesh: 2021

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Source: Euromonitor International from International Monetary Fund (IMF)/Government Finance Statistics
(GFS)/national statistics

Chart 30 Government Expenditure by Function in Bangladesh: 2021 and Period Growth

2016-2021

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Source: Euromonitor International from International Monetary Fund (IMF)/Government Finance Statistics
(GFS)/national statistics

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