Bangladesh will overtake, in GDP terms, Poland, Taiwan and Vietnam. Bangladesh economy fastest growing in Asia-Pacific region out of 32 countries.
According to World Economics’ latest report, the size of Bangladesh’s GDP in Purchasing Power Parity (PPP) terms at the end of 2023 will be $1.577 trillion, with additional estimates for the size of the informal economy and adjustments for out-of-date GDP base year.
With this huge formal and rising informal/shadow economy after 2022, Bangladesh is ahead of Australia (10th) and Pakistan (11th) in the Asia-Pacific region. This will continue even after 2023, the report has made a forecast.
World Economics also forecasts that Bangladesh will overtake, in GDP terms, Poland, Taiwan and Vietnam within the decade (2020-2030).
According to World Economics’ most recent assessment (as of June 2023), Bangladesh has the fastest-growing economy in the Asia-Pacific region out of 32 countries.
It noted that, 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.
It is also noted that the GDP growth data for June is just as unreliable as the annual data, therefore this criterion is ‘caveat emptor’.
However, earlier in 2017, World Economics reported that its projection for Bangladesh’s GDP at the end of 2022 in PPP terms was $1.074 trillion.
In its most recent report (June 2023), World Economics estimates Bangladesh’s GDP to be $1.495 trillion, or 39% higher than their official estimates.
The report stated that the size of Bangladesh’s informal economy is estimated to be 30.2% which represents approximately $324 billion in GDP per capita based on PPP levels.
According to the new estimate, with this shadow economy, Bangladesh’s GDP is the 25th largest in the world, the ninth largest in the Asia-Pacific region and the fourth largest in the Frontier Markets.
Although the shadow economy of Bangladesh is rising, in the informal economy size in percentage of GDP growth Bangladesh ranked 16th after India (4th, 43.1%), Pakistan (8th, 35.6%) and Australia (31st, 9.9%) in the Asia-Pacific region.
This estimate (2023 data) is based on IMF growth rate estimates applied to World Economics GDP data, they said.
But economists are still in doubt about the authenticity of the data.
Zahid Hussain, former lead economist at World Bank Bangladesh, told Dhaka Tribune: “Informal economy is not taken into consideration in formal economic calculations, but they have calculated the informal economy here. But our labour opportunities are shrinking. It has grown in the agriculture sector only. So how they show this rosy picture I don’t quite understand as they didn’t disclose the data source they have had.”
“The image presented by World Economics is too rosy but if this happens, it will be good news for the country; but to me, it looks like a mysterious growth”, he added.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh (PRI), also echoed similar sentiments. He told Dhaka Tribune: “I don’t understand how they calculated it.
“But yes, if this has really happened and is continuous, then it is possible for us to move forward, leaving many countries behind,” the former IMF official added.
However, according to the Bangladesh Bureau of Statistics (BBS) provisional estimate, published on May 16, 2023, at the end of FY23 Bangladesh GDP size is $453.852 billion or Tk44.392733 trillion in current price.
An informal economy (or shadow economy) is part of any economy that is neither taxed nor monitored by any form of government. The informal sector makes up a larger share of poorer, more agricultural and less developed economies.
However, the informal or shadow economy plays an important role both in employment generation and in the production and distribution of goods and services in Least Developed Countries like Bangladesh.
But since informal economy activities are generally small and not registered, statistical agencies face major difficulties in measuring economic activity associated with informality.
The informal economy embraces professions as diverse as minibus drivers, household workers or the hawkers found at traffic lights.