Bangladesh ranks as fastest growing economy in Asia-Pacific

July 31, 2023

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This is the first of a four-part series on Bangladesh’s economic indicators reported by World Economics.

Bangladesh has been named the fastest growing economy in the Asia-Pacific economies, out of 32 countries, according to the latest report published (as of June 2023) by World Economics.

On a 10-year gross domestic product (GDP) compound annual growth rate (CAGR) basis, Bangladesh ranked as the fastest growing economy in the Asia-Pacific region and also the fastest in the frontier markets, the report said.

Compound annual growth rates (CAGR) are based on the World Economics Database which presents GDP in purchasing power parity terms, with added estimates for the size of the informal economy and adjustments for out-of-date GDP base year data.

Economists of the country consider this data report of World Economics as optimistic for Bangladesh, but also question the credibility of its data.

Over the past 10 years the global economy has grown by 35%. Bangladesh’s contribution to this growth was 1.9% once any allowances are made for base year and informal economy size. In 2022, Bangladesh’s contribution to global economic growth was 0.9%. The report also stated that re-estimating Bangladesh’s GDP indicates that the economy is some 39% larger than official estimates and is the fourth largest economy in the frontier market group (FMG), the 10th largest in the Asia-Pacific region, and the 25th largest in the world.

Bangladesh’s CAGR over the last 10, 5 and 3 years was 9.1%, 9.4% and 8.5% respectively.

If the GDP growth rate suggested by Bangladesh’s official data can be relied upon, and trends of the last decade continue, the country could theoretically overtake, in GDP terms, Poland, Taiwan and Vietnam within the decade.

However, the report also said that the GDP growth data for June may be as unreliable as the annual data, so this rule is “caveat emptor” (the principle that a buyer alone is responsible for checking the quality and suitability of goods before a purchase is made).

“Despite the high but uncertain GDP per capita growth rate we can be sure that Bangladesh remains a poor country,” the report also said.

Zahid Hussain, former lead economist at World Bank Bangladesh, told Dhaka Tribune that the image presented by World Economics is too rosy. But if this happens, it will be good news for the country.

“But how they calculated 9% growth is not understood, as our government’s official data is 7.9% maximum. They have calculated the informal economy here. But our labour opportunities are shrinking. It has grown in the agriculture sector only. Nine percent growth on that alone is impossible. To me it looks like a mysterious 9% growth,” he further elaborated.

This growth rate is out of the question, countered Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh (PRI).

“I don’t understand how they calculated it,” he told the Dhaka Tribune. “But yes, if we can grow at the rate of 7%, 8%, and 10%, then it is possible for us to move forward, leaving many countries behind.”

“I have considerable doubts about the credibility of the data,” the former IMF official added.

In this Asia-Pacific region, Vietnam got second position as the fastest growing economy right after Bangladesh.

China and India ranked fifth and seventh respectively.

Vietnam’s CAGR over the last 10, 5 and 3 years was 8.6%, 8.1% and 6.4% respectively.

In 2022, Vietnam’s contribution to the growth of the global economy was 0.9%.

However, World Economics presents the view of the massive changes reshaping the world economy.

They augment official and usable data with regular quarterly surveys, enabling greater data integrity.

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