Bangladesh’s forex reserves go up

Bangladesh is an agrarian country where its GDP goes up or down depending on the performance and achievement of the agriculture sector. Visitors look at fruits during a three-day national fruit fair in Dhaka, Bangladesh, June 16, 2013.

While the per capita income of people in Bangladesh has increased substantially, the country’s foreign exchange reserve crossed the US $17 billion mark on October 22 for the first time in the country’s history. The officials of the country’s central bank Bangladesh Bank and Bangladesh Bureau of Statistics (BBS) consider such development as a good sign of the country’s economy.

Bangladesh’s per capita income has already crossed US $1,000 and the country now stands fourth in South Asia in terms of per capita income. Sri Lanka with an annual per capita income of US $2,923 in 2012~13 tops the South Asian countries while India stands second with per capita income of US $1,527 followed by Pakistan with an annual per capita income of US $1,380. Bangladesh’s per capita income has increased by US $414 from US $630 in 2008. Bangladesh’s annual per capita income has risen to US $1,044 in the 2012~13 fiscal year from US $923 of the previous year. Bangladesh officials say the social sector performance is getting better day by day and that is reflecting on the economy and the increase of per capita income.

Government organization Bangladesh Bureau of Statistics (BBS) started calculating the Gross Domestic Product (GDP) by taking 2005~06 as the base year. Various new sectors had been added with the change in the base year, which would increase GDP growth to some extent. The government aims at achieving 7.2 percent GDP growth (calculated on the old base year) in the current fiscal year 2013~14. The country’s GDP growth rate was 6.3 in the previous fiscal year 2012~13.

Bangladesh is an agrarian country where about 80 percent of its 150 million population are directly or indirectly dependent on agriculture. The photo shows a harvesting scene.

The continued increase in Bangladesh’s foreign exchange reserves for the last few years and its crossing the US $17 billion mark is a significant development in the country’s growing economy. The amount is enough to pay off six months’ imports of the country. The main reason behind such a big reserve is the strong remittance inflow from over eight million Bangladeshi migrant workers as well as growing exports and reduced imports.

For the last few years, the country’s foreign exchange reserves has been showing an upward trend and on August 13 this year forex reserves crossed the US $16 billion mark for the first time before its latest new record.

Over eight million workers from Bangladesh are now engaged abroad in various jobs in about 150 countries and they are remitting their hard-earned money to the country through banks or authorized financial agencies and such remittances are also increasing. This remittance is contributing a lot to build up the country’s foreign exchange reserve.

The country’s foreign exchange earnings from exports are also going upward. Readymade garments and knitwear exports continue to increase in earning more foreign exchange than before. Exports from some other sectors are also growing and earning foreign exchange. At the same time, the country’s imports in some other sectors, especially foodgrain imports, have decreased substantially. For the last three years there was bumper rice production in Bangladesh and the country became self-sufficient in food. Before that, Bangladesh had to depend on imported foodgrains to meet the country’s need. But the scenario has changed and Bangladesh is now a food-surplus country. Therefore, the country does not require the imports of foodgrains, and thus, a big amount of foreign exchange has been saved, which also helped to build up the foreign exchange reserves.

Growth in Bangladesh’s foreign exchange reserves along with the increase in per capita income has been appreciated by high officials of Bangladesh Bank and economists, since according to them it shows that the country now stands on a strong economic base. The contribution of the country’s workers and entrepreneurs is commendable in this regard while the success in the agriculture sector and others is also significant. Observers believe the growing trend of the economy should be maintained with the combined efforts of the government and the people.

Bangladesh is an agrarian country where about 80 percent of its 150 million population is directly or indirectly dependent on agriculture. The country’s GDP goes up or down depending on the performance and achievement of the agriculture sector. Since the country’s cultivable land is limited, the government and authorities concerned have been adopting special measures to increase foodgrain production, especially rice. High yield varieties of rice seeds are being distributed among the farmers while an adequate supply of chemical fertilizers at subsidized rates has been ensured.

Healthy fundamentals

About 80 percent of Bangladesh’s export earnings come from readymade garments industry. The photo shows female workers working at a garment factory.

Irrigation facilities are also being provided by the government’s authorized agencies. All these arrangements resulted in the bumper production of rice for the last few years. Now, all these facilities and special arrangements should remain as before and should also be enhanced to ensure bumper production of foodgrains every year, which would strengthen the economic base of the country.

Bangladesh’s export earnings are largely dependent on readymade garments (RMG). About 80 percent of the country’s export earnings come from RMG. About 5,000 garment factories are now operating in Bangladesh where some four million workers, mostly young women, are engaged. This important sector needs more care and better facilities for the workers to maintain its production to meet the demand of the world market.

Recent accidents like the factory building collapse and fire, which claimed many lives, clearly indicates that the RMG industry should take more precautionary measures for the safety of workers. The RMG factory workers should also get adequate and reasonable salaries so that they can survive comfortably. The issue of enhancing the salary of RMG factory workers is now under consideration by the government’s Labour Wage Board and its recommendations are expected soon.

Sustaining better performance of the agriculture sector and the industrial sector, especially the RMG industry, will make it possible to maintain the present status of the economy and improve it further.