Bangladesh - Economy

Overview: The country has a high population density, limited natural resources and an agricultural economy vulnerable to floods and cyclones, but it nevertheless achieved economic growth averaging around 4% p.a. from the 1970s. It does also have huge reserves of natural gas and some coal.

Economic policy has long aimed at the alleviation of poverty through increasing food production and expanding education, while developing an industrial and technological base, but severe floods have often frustrated development plans.

From the mid-1990s, successive governments were committed to free-market policies, privatisation of state-owned enterprises, attracting overseas investment and banking reform. More than 60 state-owned enterprises, in areas as diverse as manufacturing, agriculture, transport and communications, were identified for divestment, but progress was slow due to strong popular opposition. These policies led to an improvement in economic performance, even in 1998 when the country was devastated by the floods that covered nearly two-thirds of the land area.

From 2000 the economy grew strongly, with growth rates peaking at over 6% p.a. in 2004–07 driven by strong exports and investment. By early 2008, natural disasters and subsequent rapid food price increases put severe pressure on the urban and landless rural poor, reversing some of the earlier reductions in poverty. Despite this, for most of 2008, the economy remained resilient with continuing growth in clothing exports and remittances from Bangladeshis living abroad.

Trade: Exports of goods and services account for 16% of GDP and manufactured exports for 90% of total merchandise exports (2004). Principal exports are clothing, fish products, jute goods and leather goods. Principal imports are machinery and transport equipment, textiles and yarn, fuels, iron and steel, chemicals and food. Chief export partners are the USA, Germany, the UK, France and Italy. Chief import partners are India, China, Singapore and Japan.