Economy of Bangladesh

Bangladesh is a developing country that is classified as a Next Eleven emerging market and one
of the Frontier Five. According to a recent opinion poll, Bangladesh has the second most procapitalist population in the developing world. Between 2004 and 2014, Bangladesh averaged a
GDP growth rate of 6%. The economy is increasingly led by export-oriented industrialization.
The Bangladesh textile industry is the second-largest in the world. Other key sectors include
pharmaceuticals, shipbuilding, ceramics, leather goods and electronics. Being situated in one of
the most fertile regions on Earth, agriculture plays a crucial role, with the principal cash crops
including rice, jute, tea, wheat, cotton and sugarcane. Bangladesh ranks fifth in the global
production of fish and seafood. Remittances from the Bangladeshi diaspora provide vital foreign
exchange. The Bangladesh telecoms industry has witnessed rapid growth over the years and is
dominated by foreign investors. The government has emphasized the development of software
services and hi-tech industries under the Digital Bangladesh scheme. Bangladesh has substantial
reserves of natural gas and coal; and many international oil companies are involved in production
and exploration activities in the Bay of Bengal. Regional neighbors are keen to use Bangladeshi
ports and railways for transshipment. Located at the crossroads of SAARC, the ASEAN+3,
BIMSTEC, and the Indian Ocean, Bangladesh has the potential to emerge as a regional economic
and logistics hub.
In 2015, per-capita income stood at USD 1,314. While achieving significant macroeconomic
stability, Bangladesh continues to face challenges such as infrastructure deficits and energy
shortages.

Overview of Bangladeshi Economy:

Economy of Bangladesh

Currency

Bangladesh Taka (BDT)

Fiscal year

1 July - 30 June

Trade organizations

SAFTA, BIMSTEC
Statistics

GDP

$655 billion (PPP) 31st; (2014)

$205.60 billion (nominal) 44th; (2015)

GDP rank

31st (PPP) / 44th (nominal)

GDP growth

6.51% (2014-15)

GDP per capita

$3,019 (PPP); (2014)

GDP by sector
Inflation (CPI)
Population below poverty

$1,314 (nominal; 2015)

Agriculture: 19%; industry: 30%; services: 51% (2013)
6.2% (2012)
22% (2013)

line
Labour force
Labour force by occupation
Unemployment
Main industries

87.9 million (2013)

agriculture: 40%, industry: 30%, services: 30% (2013)
4.5% (2013)
textiles, food processing, steel, pulp and paper, jute,
shipbuilding, pharmaceuticals, electronics, automotive parts,
ceramics, fertilizer, construction materials, leather, natural gas,

renewable energy
Ease-of-doing-business rank 117th
External
Exports
$30.1 billion (FY2013-14)
Export goods
textiles, leather goods, processed and frozen food, porcelain,
bone china, ocean-going ships, medicine, software, consumer
Main export partners

appliances, jute, jute products,tea

European Union 53.3%

United States 21%

Canada 4.2%
Turkey 2.7%
Imports
Import goods

Japan 2.2%
$29.37 billion (FY2013-14)
petroleum, machinery and equipment, foodstuffs, iron and

Main import partners

steel, automobiles, cotton, palm oil

Thailand 22.8%
India 11.2%
China 8.8%
European Union 6.6%

Public debt
Revenues
Expenses

Indonesia 6%
$36.21 billion (31 December 2012)
Public finances
22.8% of GDP (2013)
$14.67 billion (2013.)
$22.15 billion (2013.)

Foreign reserves

$22.327 billion (Jul 2014)

Gross external debt

Bangladesh has made significant strides in its economic sector performance since independence
in 1971. Although the economy has improved vastly in the 1990s, Bangladesh still suffers in the
area of foreign trade in South Asian region. Despite major impediments to growth like the
inefficiency of state-owned enterprises, a rapidly growing labor force that cannot be absorbed by
agriculture, inadequate power supplies, and slow implementation of economic reforms,
Bangladesh has made some headway improving the climate for foreign investors and liberalizing
the capital markets; for example, it has negotiated with foreign firms for oil and gas exploration,
better

countrywide

distribution

of

cooking

gas,

and

the

construction

of natural

gas pipelines and power stations. Progress on other economic reforms has been halting because
of opposition from the bureaucracy, public sector unions, and other vested interest groups.
The especially severe floods of 1998 increased the flow of international aid. So far the global
financial crisis has not had a major impact on the economy. Foreign aid has seen a gradual
decline over the last few decades but economists see this as a good sign for self-reliance. There

has been a dramatic growth in exports and remittance inflow which has helped the economy to
expand at a steady rate.
Export and Import:
Fiscal Year

Total Export

Total Import

Foreign Remittance Earnings

20072008

$14.11b

$25.205b

$8.9b

20082009

$15.56b

$22.00b+

$9.68b

20092010

$16.7b

~$24b

$10.87b

20102011

$22.93b

$32b

$11.65b

20112012

$24.30b

$35.92b

$12.85b

20132014

$30.10b

$29.37b

$14.00b

Economy of India
The Economy of India is the seventh-largest in the world by nominal GDP and the third-largest
by purchasing power parity (PPP). The country classified as newly industrialized country, one of
the G-20 major economies, a member of BRICS and a developing economy with around 7%
average growth rate since last two decades. Indian Economy become world's fastest growing
major economy from last quarter of 2014 replacing China.
The long-term growth prospective of Indian Economy is moderately positive due to its young
population and corresponding low dependency ratio, healthy savings and investment rates, and
increasing integration into the global economy, Indian Economy has potential to become world's
3rd-largest Economy by next decade and one of the largest economy by the mid-century. And
The Outlook for Short-term growth prospective is also brighter as according to IMF Indian
economy is the "bright spot" in the global landscape, India also tops World Banks growth

outlook for the year 2015-16 for the first time with economy grown 7.3% in 2014-15 & expected
to grow at 7.5% in 2015-16. India has the one of fastest growing Service Sector in the world with
annual growth rate of above 9% since 2001, which contributes 57% of GDP in 2012-13. India
has capitalized its economy based on its large educated English-speaking population to become a
major exporter of Information Technology services, Business Process Outsourcing services, and
software services with $167.0 billion worth of service exports in 2013-14, which is also the
fastest-growing part of the economy. The IT industry continues to be the largest private sector
employer in India. India is also the fourth largest start-up hub in the world with over 3,100
technology start-ups in 2014-15 The agricultural sector is the largest employer in India's
economy but contributes a declining share of its GDP (17% in 2013-14). India ranks second
worldwide in farm output. The Industry sector has held a constant share of its economic
contribution (26% of GDP in 2013-14). The Indian auto industry is one of the largest in the
world with an annual production of 21.48 million vehicles in FY 2013-14. India has $600 billion
worth of retail market in 2015 and one of world's fastest growing E-Commerce markets. India's
two major stock exchanges, Bombay Stock Exchange and National Stock Exchange of India, had
a market capitalization of US$1.71 trillion and US$1.68 trillion respectively as of Feb
2015,which ranks 11th & 12 largest in the world respectively according to World Federation of
Exchanges.

Economy of India

Currency

Indian rupee (INR) () = 100 Paise

Fiscal year

1 April 31 March

Trade
organizations

WTO, SAFTA, BRICS, G-20 and others

Statistics

GDP

$2.308 trillion (Nominal, April 2015)

$7.996 trillion (PPP, April 2015)

GDP rank

7th (Nominal) / 3rd (PPP)

GDP growth

7.3% (2014-15)

GDP per capita

$1,808 (Nominal: 131th; 2015)

$6,265 (PPP: 121th; 2015)

GDP by sector

Agriculture: 17%
Industry: 26%
Services: 57% (2013-14)

Inflation (CPI)

CPI: 5.01%
WPI:-2.36% (May, 2015)

Population below 23.6%, 276 million (2011, World Bank, based on 2005 ICP PPP)
poverty line
21.9% (2012, Reserve Bank of India),
21.9% (2012, United Nation's Millennium Development Goal (MGD)

Labour force

502.3 million (2014)

Labour force by Agriculture: 49%

occupation
Industry: 20%
Services: 31% (2012)
Unemployment

3% Urban
2% Rural
Total=10.8 million
(2013, NSSO method)

Average gross
salary

$1.46 per hour ($3,036.8 yearly in 2010);

GNI per capita: $1,570 yearly per person (2010);
Average household income: $6,671 yearly (2010)

Main industries

software, petroleum products, chemicals, pharmaceuticals, agriculture,

textiles, steel, transportation equipment, machinery, cement, mining,

construction

External
Exports

$313.2 billion: merchandise exports

$150.9 billion: services exports
$464.2 billion: Total (2013)

Export goods

software, petrochemicals, agriculture products, jewelry, engineering

goods, pharmaceuticals, textiles, chemicals,transportation, ores and other
commodities

Main export
partners

European Union 16.7%(2013)

United States 12.5%
United Arab Emirates 10.1%
China 4.9%
Singapore 4.2%

Imports

$466 billion: merchandise imports

$124.6 billion: services imports
$590.6 billion: Total (2013)

Import goods

crude oil, gold and precious stones, electronics, engineering goods,

[20]
chemicals, plastics, coal and ores, iron and steel, vegetable oil and
other commodities

Main import
partners

FDI stock

China 11.1% (2013)

European Union 10.6%
Saudi Arabia 7.9%
United Arab Emirates 7.1%
Switzerland 5.3%
Inflows: $223.7 billion
Outflows: $54.6 billion (2009-2013)
Public finances

Public debt

66.7% of GDP (2013)

Budget deficit

4.1% of GDP (201415)

Revenues

27.5 trillion (US$440 billion) (2015,IMF)

Expenses

37.6 trillion (US$600 billion) (2015,IMF)

Economic aid

$2.43 billion (2013)

Credit rating

BBB- (Domestic)
BBB- (Foreign)
BBB+ (T&C Assessment)
Outlook: Stable
(Standard & Poor's)[26]

Foreign reserves $354.3 billion (as of 12 June 2015)

External trade and investment

Global trade relations

Until the liberalization of 1991, India was largely and intentionally isolated from the world
markets, to protect its economy and to achieve self-reliance. Foreign trade was subject to import
tariffs, export taxes and quantitative restrictions, while foreign direct investment (FDI) was
restricted by upper-limit equity participation, restrictions on technology transfer, export
obligations and government approvals; these approvals were needed for nearly 60% of new FDI
in the industrial sector. The restrictions ensured that FDI averaged only around $200 million
annually between 1985 and 1991; a large percentage of the capital flows consisted of foreign aid,
commercial borrowing and deposits of non-resident Indians. India's exports were stagnant for the
first 15 years after independence, due to general neglect of trade policy by the government of
that period. Imports in the same period, due to industrialization being nascent, consisted
predominantly of machinery, raw materials and consumer goods. Since liberalization, the value
of India's international trade has increased sharply, with the contribution of total trade in goods

and services to the GDP rising from 16% in 199091 to 47% in 200810. India accounts for
1.44% of exports and 2.12% of imports for merchandise trade and 3.34% of exports and 3.31%
of imports for commercial services trade worldwide. India's major trading partners are the
European Union, China, the United States of America and the United Arab Emirates. In 200607,
major export commodities included engineering goods, petroleum products, chemicals and
pharmaceuticals, gems and jewelry, textiles and garments, agricultural products, iron ore and
other minerals. Major import commodities included crude oil and related products, machinery,
electronic goods, gold and silver. In November 2010, exports increased 22.3% year-on-year to
850.63 billion (US$14 billion), while imports were up 7.5% at 1251.33 billion (US$20
billion). Trade deficit for the same month dropped from 468.65 billion (US$7.4 billion) in 2009
to 400.7 billion (US$6.4 billion) in 2010. India is a founding-member of General Agreement on
Tariffs and Trade (GATT) since 1947 and its successor, the WTO. While participating actively in
its general council meetings, India has been crucial in voicing the concerns of the developing
world. For instance, India has continued its opposition to the inclusion of such matters as labour
and environment issues and other non-tariff barriers to trade into the WTO policies.

Balance of payments
Since independence, India's balance of payments on its current account has been negative. Since
economic liberalization in the 1990s, precipitated by a balance of payment crisis, India's exports
rose consistently, covering 80.3% of its imports in 200203, up from 66.2% in 199091.
However, the global economic slump followed by a general deceleration in world trade saw the
exports as a percentage of imports drop to 61.4% in 200809. India's growing oil import bill is
seen as the main driver behind the large current account deficit, which rose to $118.7 billion, or
11.11% of GDP, in 200809. Between January and October 2010, India imported $82.1 billion
worth of crude oil. Indian economy has run a trade deficit every year over 2002-2012 periods,
with a merchandise trade deficit of US$189 billion in 2011-12. Its trade with China has the
largest deficit, about $31 billion in 2013. India's reliance on external assistance and concessional
debt has decreased since liberalization of the economy, and the debt service ratio decreased from
35.3% in 199091 to 4.4% in 200809. In India, External Commercial Borrowings (ECBs), or
commercial loans from non-resident lenders, are being permitted by the Government for

providing an additional source of funds to Indian corporates. The Ministry of Finance monitors
and regulates them through ECB policy guidelines issued by the Reserve Bank of India under the
Foreign Exchange Management Act of 1999. India's foreign exchange reserves have steadily
risen from $5.8 billion in March 1991 to $318.6 billion in December 2009. In 2012, the United
Kingdom announced an end to all financial aid to India, citing the growth and robustness of
Indian economy.

Economy of Sri Lanka

With an economy worth $80.591 billion (2015) ($233.637 billion PPP estimate) and a per capita
GDP of about $11,068.996 (PPP), Sri Lanka has mostly had strong growth rates in recent years
until the government toppled early in 2015 where most development projects were stopped
abruptly on corruption claims. In GDP per capita terms, it is ahead of other countries in the South
Asian region. The main economic sectors of the country are tourism, tea export, apparel, textile,
rice production and other agricultural products. In addition to these economic sectors, overseas
employment contributes highly in foreign exchange, 90% of expatriate Sri Lankans reside in the
Middle East. Since becoming independent from Britain in February 1948, the economy of the
country has been affected by natural disasters such as the 2004 Indian Ocean earthquake and a
number of insurrections, such as the 1971, the 1987-89 and the 1983-2009 civil war. The parties
which ruled the country after 1948 did not implement any national plan or policy on the
economy, veering between left and right wing economic practices. The government during 197077 period applied pro-left economic policies and practices. Between 1977 and 1994 the country

came under UNP rule and between 1994 and 2004 under SLFP rule. Both of these parties applied
pro-right policies. In 2001, Sri Lanka faced bankruptcy, with debt reaching 101% of GDP. The
impending currency crisis was averted after the country reached a hasty ceasefire agreement with
the LTTE and brokered substantial foreign loans. After 2004 the UPFA government has
concentrated on mass production of goods for domestic consumption such as rice, grain and
other agricultural products. The Sri Lankan economy has seen robust annual growth at 6.4
percent over the course of 2003 to 2012, well above its regional peers. Following the end of the
civil conflict in May 2009, growth rose initially to 8 percent, largely reflecting a peace
dividend, and underpinned by strong private consumption and investment. While growth was
mostly private sector driven, public investment contributed through large infrastructure
investment, including post war reconstruction efforts in the North and Eastern provinces. Growth
was around 7 percent in 2013, driven by a rebound in the service sector which accounts for
approximately 60 percent of GDP. With nearly 2 million Sri Lankans living abroad, overseas
employment has contributed with foreign exchange and remittances in the order of 10 percent of
GDP in 2013. Overall, unemployment at 4 percent is low, although youth unemployment (ages
1524) at around 17.3 percent and low female labor force participation at 30 percent do pose a
challenge.
Economy of Sri Lanka
Currency

Sri Lankan rupee (LKR)

Fiscal year

Calendar year

Trade organizations

SAFTA, WTO
Statistics

GDP

US$ 80.591 Billion (World bank.) / US$ 233.637 Billion PPP

GDP growth

7.3%

GDP per capita

US$ 3,818.161 (2015) / US$ 11,068.996 USD PPP

GDP by sector

agriculture: 12.8%; industry: 29.2%; services: 58% (2009)

Inflation (CPI)

6.9%

Population below poverty

line

4.3%

Gini coefficient

36.4

Labour force

8,319,680

Labour force by occupation agriculture: 32.7%; industry: 26.3%; services: 41%

Unemployment

4.3%

Main industries

processing of rubber, tea, coconuts, tobacco and other

agricultural commodities; telecommunications,
insurance, banking; tourism, shipping; clothing, textiles;
cement, refining, information services, construction

Ease-of-doing-business rank 81st

External
Exports

$10.89 billion

Export goods

textiles and apparel, pharmaceuticals, tea, spices, diamonds,

emeralds, rubies, coconut products, rubber manufactures, fish

Main export partners

United States 21.8%

United Kingdom 8.3%
India 4.5%
Germany 4.2%

Imports

$20.02 billion

Import goods

textile fabrics, mineral products, petroleum, foodstuffs,

machinery and transportation equipment

Main import partners

India 21.5%
China 17.6%
Singapore 10.1%
United Arab Emirates6.1%
Iran 4.9%

FDI stock

US$1 Billion

Gross external debt

$19.45 billion

Public finances
Public debt

81% of GDP

Revenues

$8.495 billion

Expenses

$12.63 billion

Economic aid

$808 million

Foreign reserves

$7.2 billion

External sector:
Trade account issues
In the recent past, the Sri Lankan Government has identified some key focal areas to address the
external imbalances of the economy, especially with regard to reducing its high trade deficit
(~15% of GDP for 2012) in order to make the economy comply with the MarshallLerner
condition. Sri Lanka's oil import bill accounts for an estimated 27% of total imports while its
pro-growth policies have resulted in an investment goods import component of 24% of total
imports. These inelastic import components have led to Sri Lanka's Export goods price elasticity
+ Import goods price elasticity totaling less than 1, resulting in the country not complying with
the MarshallLerner condition.

Some of the suggested proposals include:

Import substitution of investment goods and consumer goods

Tax concessions towards value added exports

Negotiating longer credit periods for oil imports

Allowing the external value of the currency to be determined by market forces (with
minimal central bank intervention).

Key cushioning items in the current account

Tourism revenue (Sri Lanka's tourism revenue accounted for ~US$1bn for FY2014 with
~1mn tourist arrivals)

External worker remittances accounted for ~US$6bn in FY2014

However, as the income account reported a negative balance owing to high debt servicing
payments and repatriation of income from foreign investments, the current account deficit
was reported at 5.5%to 2014 GDP.

Capital account

Within the capital account, borrowings still account for a significant proportion as
opposed to Foreign direct investments.

FDIs were estimated at ~US$800mn for FY2015

Overall balance (BOP)

The economy ended with an overall positive balance of US$151mn for 2014 (vs. a
US$1,061mn deficit in FY2013)