International Trade: Bangladesh's Economic Growth and Challenges

This report provides a comprehensive overview of international trade in the context of Bangladesh. It examines the country's impressive GDP growth, structural economic changes, and rising per capita income, highlighting the significance of trade for its economy. The report details Bangladesh's trade performance, including export and import values, trade balances, and the evolution of its trade policies. It analyzes the country's transition through different phases of global integration and explores the contributions of export earnings to national GDP. Key aspects such as export diversification, market share, and major exportable products are discussed, alongside challenges like market and product concentration. The report also addresses the impact of Bangladesh's graduation from LDC status, trade opportunities, preferential market access, and potential challenges, including market loss and the need for product and market diversification. It also reviews the country's export policy and the impact of graduation on its trade, emphasizing competitiveness factors, trade preferences, and future prospects.

International Trade: Bangladesh Context
Source:
Bangladesh Foreign Trade Institute (BFTI)

Bangladesh Economy
❑ GDP growth remained high
 Over the last two decades, GDP growth rate (5.9%) significantly
surpassed the global average (2.7%) and remained higher than the
average for developing countries (5.1%)
 If we exclude China, average GDP growth rate of Bangladesh was
around 2 percentage point higher than average of (other)
developing countries
 GDP growth rate of Bangladesh in FY2018-19: 8.11%
❑ Structural changes in the economy
 Share of Agriculture Sector in GDP declined from 31% in 1990 to
13.82% in FY 2018
❑ Per capita income (GNI) is on the rise
 Per capita GNI in nominal terms: USD 1909 (FY2019)
 Set to graduate from LDC to Developing country in 2024
 Graduated to lower middle income countries (LMIC) from low
income countries (LIC) in July 2015 (2014: threshold USD 1,045)

Importance of Trade
GDP = C + I + G + (X – M) or GDP = private
consumption + (gross investment + govern
investment) + government spending + (exp
imports).

Importance of International Trade
Export : Foreign Exchange Earning / Employment
dependency on Foreign Assistance
Import : Consumption (giving consumers greater
differentiated products) + Industrial raw material
Employment
Trade is not only increasing business activities, b
- generating employment opportunities for millions
- Skills development
- attracting foreign investment
- Innovation and entrepreneurship

Importance of International Tr
• Trade facilitates export diversification : ne
new materials and new production possibilities
• Trade encourages innovation and technolog
through foreign direct investment.
• Plays a role in the improvement of quality of g
labour productivity and environmental sta
• It increased competition and the exchange o
practices between trade partners and bu
in industry and product standards.

Contribution of Export earning in National GDP
FY Total GDP Export earning % of share in GDP
2010-11 128681.86 22928.22 17.82%
2011-12 133401.26 24301.90 18.22%
2012-13 149996.65 27027.36 18.02%
2013-14 172886.57 330186.45 17.46%
2014-15 194550.09 301208.94 16.04%
2015-16 221002.62 34257.18 15.50%
2016-17 249723.89 34846.84 15.25%
2017-18 274,025 36668.17 13.38%
2018-19 40535.04
Value in million US$

Export-Import Balance of Trade
FY Exports Imports Balance
10-11 22928 33657 -10729
11-12 24302 35516 -11214
12-13 27027 33969 -6942
13-14 30187 40693 -10506
14-15 31209 40639 -9430
15-16 34257 40036 -5779
16-17 34847 43666 -8819
17-18 36668 52953.4 -16285
18-19 40535 54964 -14429
Value in million US$

Transition in trade
• In case ofBangladesh three phases can be discerned as regards
integration of the Bangladesh economy
 Phase-1:Post-independence to late 1970s→ Protectionist,import-
substituting, inward looking
 Phase-2:Early 1980sto Early 1990s→ Gradual opening to global
markets
 Phase-3:Mid-1990sto currentperiod → Faster pace of global
integration
• Main featuresof Bangladesh’sTrade Policy: Trade liberalisation;
Deregulation;Reduction oftariffs;Removalof NTBs;Reduction ofanti-
export bias in the economy; import liberalisation

1972-73 2018-19
No. of Products 25 766 (H.S. Code 4 digit)
No. of Markets 68 202
Export Value 348.41 Mln. US$ 46828.80 Mln. US$
Exports ….

Trend in Export Trade from 1972-73 to 2018-2019
FY Export earning
72-73 348.41
82-83 443.43
92-93 725.82
02-03 6548
12-13 7027
16-17 34847
17-18 36668
18-19 40535
(Value in million US$)
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
EXPORT

Export Earning of Bangladesh From Goods &
Sector
in million US$
FY Export Earning Total Growth (%)
Goods Service
2012-13 27027.36 2936.30 29963.66
2013-14 30186.62 3243.88 33430.50 11.57
2014-15 31208.94 3210.85 34419.79 2.96
2015-16 34257.18 3494.90 37752.08 9.68
2016-17 34846.84 3653.71 38500.55 1.98
2017-18 36668.17 4586.31 41254.48 7.15
2018-19 40535.04 6293.76 46828.80 13.51

01. Woven garments 42.54%
Six Items constitute
92.20% of the total
export figure .
02. Knit garments 41.66%
03. Leather & leather
products 2.52%
04. Jute & jute Goods 2.01%
05. Agricultural products 2.24%
06. Frozen foods 1.23%
Total: 92.20%
Shares of the Major Exportable during 2018-2019