The International Monetary Fund's (IMF) latest update on the World Economic Outlook database has put Bangladesh on the path to become a $500 billion economy by 2024-25. On its way, the nation is projected to outperform developed economies like Denmark, Norway, Singapore and Hong Kong.
While it may be presented as a great achievement, there is more to the story than what the naked eye sees.
Gross domestic product (GDP) is an important indicator of an economy. But it is not the be-all-and-end-all of economic indicators. There are more important economic indicators such as, per capita GDP as well as the Human Development Index which must be taken into account to get a more holistic picture of the economy.
To put it simply, GDP is the total monetary value of all the finished goods and services produced within a country's borders during a specific period, usually a year. The indicator was created by British economist John Maynard Keynes to assess Britain's wartime production. It was specifically designed to measure the production capabilities and growth in an economy. It is not and should not be regarded as an indicator of the economic prosperity and social well-being of a country's citizens.
To understand the effect of GDP on actual human lives, we can look at another indicator called GDP per capita or income per capita. This is derived by dividing a nation's GDP by its total population. It provides a rough estimate of how the GDP will be distributed among the people of a nation.
Bangladesh's current GDP per capita stands at $2,138 which is higher than India. But the countries Bangladesh is supposed to overcome, in terms of GDP, have and will continue to have a much higher per capita income than Bangladesh. For example, Denmark currently has a per capita GDP of $67,919 which will increase to $81,950 by 2025. Bangladesh's per capita income is also set to grow, but it will barely reach the $3,000 mark.
By contrast, Norwegians will enjoy a per capita income of $89,679 by 2025. Even Bhutan, the country which is set to have the lowest GDP among all south Asian countries will enjoy a higher per capita GDP of $4,626 at the same time.
Norway and Denmark have a population of 5,475,439 and 5,818,294 respectively. But even their combined population is almost 15 times smaller than the population of Bangladesh. As a result, even when Bangladesh will cross them in overall GDP, it will not be possible to cross them based on GDP per capita.
Bangladesh will also not be able to compete with these countries based on the standards of living. According to World Population Review, Denmark ranks first among all countries based on the quality of life while Norway is at 11th and Singapore is at 34th. Bangladesh, meanwhile, is in the 81st position.
Bangladesh also lags behind these countries when it comes to human development. According to the Human Development Index, published by the UN Development Programme, Norway ranks first in the world in human development while Hong Kong and Denmark rank fourth and 10th respectively. Singapore is close behind them at the 11th position.
Bangladesh, on the other hand, is in the 133rd position. While children in the aforesaid four countries enjoy, on average, 12.35 years of schooling, Bangladeshi children only get to enjoy 6.2 years. These countries also have higher per capita Gross National Income (GNI). Singapore, for example, has the per capita GNI of $88,155 while Bangladesh has $4,976.
Dr MM Akash, the chairman of the Department of Economics at the university of Dhaka believes these forecasts can be wrong. "If we just extend the linear graph without taking important factors into consideration," he said, "then this will just be a mechanical prediction. We have to take a more holistic approach when it comes to predicting economic growth".
His assessment certainly is true, especially for countries like Bangladesh. According to the World Bank, advanced economies will deviate from pre-pandemic projections by only -0.1% while low income countries like Bangladesh are expected to deviate by almost -5%.
If our current rate of growth is continued, Bangladesh perhaps will be able to achieve the milestone. But that will not mean a drastic improvement in people's lives. Dr Akash said, "We are currently experiencing jobless growth, where investments are being made in capital intensive sectors but a huge number of workers are struggling to find work. If capital is not invested efficiently to create more employment opportunities, common people will not be able to reap the rewards". It will be an imbalanced growth.
Our human resource does have the potential to create more economic prosperity in the future. But that will require a nurturing environment. "We have to ensure food security, quality public education and rule of law", explained Dr Akash. "Even though we have made strides in food security, the latter two are still not up to global standards. We have to provide education which will allow skilled addition to the labour force".
Reaching the $500 billion mark may appear as an accomplishment worth celebrating. But the main goal of the economy is to create welfare for the people. We have to ensure inclusivity and accountability which will allow everyone to benefit from the nation's burgeoning economy.