Bangladesh has made remarkable economic and development progress in the last five decades and now the country needs a strong reform agenda to sustain its growth trajectory and further accelerate the growth rate in the long term, said a World Bank report, report BSS. 

The report titled “The Country Economic Memorandum – Change of Fabric identifies” formally launched at a city hotel on Thursday identified key barriers to higher growth and proposed actionable reforms to maintain rapid growth.

It urged strong policy reforms in three areas critical to sustaining growth: stem the erosion of trade competitiveness, address vulnerabilities in the financial sector, and ensure an orderly urbanization process.

World Bank acting country director Dandan Chen gave the opening remarks while Hoon S Soh, practice manager, macroeconomics, trade, investment and public sector, South Asia, World Bank gave the closing remarks.

Nora Dihel, senior economist and Zahid Hussain, lead economist consultant, World Bank made a power-point presentation on the findings of the report.

Yutaka Yoshino, lead country economist for Bangladesh, moderated the programme.

The report also explored the implications of digital development and climate change as cross-cutting themes in these reform areas.

It envisages export diversification to reduce the risk of export volatility, create new sources of growth, and increase foreign exchange earnings in the long term. The heavy reliance on ready-made garments and Bangladesh’s protective tariff regime inhibits diversified export growth.

Further, with trade competitiveness based on low wages and trade preferences eroding, the country can increase the resilience of economic growth by diversifying its export basket.

Average tariffs in Bangladesh are higher than its comparator countries: the average tariff rate on intermediate goods in Bangladesh is 18.8 per cent, which is about twice the rate as in China, Thailand and Vietnam.

Overall trade costs and inefficient border processes are major impediments to trade. Deep and comprehensive trade agreements with the European Union and India covering tariff modernization, increased trade facilitation, and services and investment reforms can respectively boost Bangladesh’s GDP by 0.4 and 0.5 per cent and exports by 1.4 and 3.9 per cent.

Scaling up private sector financing is essential for sustaining economic growth. Actions to improve asset quality, increase the capitalization of banks, and address increasing non-performing loans are urgently needed to maintain financial stability and accelerate credit growth.

Unlike Thailand, China and Vietnam, Bangladesh has an untapped domestic capital market, which is required for raising long-term finance, particularly for infrastructure and climate adaptation projects.

In his speech, MA Mannan said that Bangladesh is on the right path in terms of attaining GDP growth, attaining self-sufficiency in food, reaching power connections to the doorsteps of people and increasing the literacy rate.

Turning to the issue of uncertainty and political instability, Mannan said that political instability could be there as clouds are gathering in the sky.

“But, we hope that the storm of black clouds will not come as it will be ominous for all …. it won’t work to find a solution to problems with sticks.”

Bd-pratidin English/Golam Rosul