Kazi Zahidul Hasan :
Economists on Saturday said that Bangladesh needs to beat several challenges if it wants to elevate itself to the middle-income country from the lower middle-income one.
They said that Bangladesh must come out from the 6.0 per cent growth trap first for becoming the middle-income country and it is the first and foremost challenge for the country.
At the same time, it will also face challenges like maintaining political and macro-economic stability, developing necessary physical infrastructure, infusing management dynamism and good governance in the banking sector, exploiting the opportunities of agriculture and industrial sectors, and reducing income inequality between rural and urban areas.
“Tough challenges are waiting for Bangladesh to elevate the country to a middle-income one from just achieved lower middle-income status,” Dr Zahid Hussain, lead economist at the World Bank’s Dhaka office told The New Nation yesterday.
He said, the first challenge for the country is to retain the successes that already it achieved in macro-economic fronts and the second one is to overcome the 6.0 per cent growth trap.
“Bangladesh has been maintaining an average 6.0 per cent GDP growth for the last few years and this growth is not optimum if we consider the strength of the economy. The GDP growth remains at the same level due to lack of necessary investment,” he added.
Dr Zahid mentioned that the overall investment remains 29 per cent of the GDP which is needed to be raised to 33 per cent for achieving a higher economic growth. If the country fails to attain inclusive growth provided by necessary investment, attaining the goal of middle-income status would be difficult.
So, the government must address this particular area with making transformative investment in developing human resources, physical infrastructure, and power and energy sectors.
The WB’s lead economist also stressed the need for making necessary investment in technological up-gradation for boosting farm production and productivity, and competitiveness of local industries.
“The agriculture and industrial sectors are the major contributors of Bangladesh economy. But their potential is yet to be fully exploited due to lack of technology transfer, skilled manpower and product diversification,” he said, adding, “If the government takes proper care of these sectors, their contribution to the GDP would be enhanced.”
Dr Zahid pointed out that Bangladesh needs to enhance its GNI from LIC threshold to $4000 to achieve the milestone of middle-income country.
“To increase the per capita income, special focus should be given on reducing income inequality between the urban and rural areas. At the same time, job opportunities should be created for thousands of unemployed population,” he added.
“Bangladesh did progress in various economic fronts over the years, with rising per capita income. But, the economy is still remained underperformed due to lack of necessary investment and good political and economic governance,” said Dr Salehuddin Ahmed, former governor of Bangladesh Bank (BB).
He said that the national economy remains stagnant over the years and it fails to go into a higher growth trajectory mainly due to the above mentioned reasons. It seems to become a key barrier for Bangladesh to become a middle income country.
“Rising income inequality between the urban and rural population is another key challenge for becoming a middle income country,” he said, adding that the government should formulate proper policy to reduce such inequality making basic services available to the poor.
Furthermore, it should create the opportunities for availing easy access to finance for the SMEs and rural businesses so that they can contribute to the national economy creating jobs for unemployed rural population.
