Bangladesh Economic Review 2022

EXECUTIVE SUMMARY

Global Economy below its pre-pandemic trend, and output of small

island states will be 8.5 percent below.
While global economy was recovering strongly
from the COVID-19 pandemic, the war in In the World Economic Outlook (WEO) April
Ukraine posed a setback to the ongoing recovery. 2022, International Monetary Fund (IMF)
A rise in the global commodity prices and projected that the global economy will grow by
sluggish economic activities by war induced 3.6 percent both in 2022 and 2023. The
supply chain disruption is being observed. projections for 2022 and 2023 are 0.8 and 0.2
percentage points lower than in the January 2022
International organisations revised their forecasts
WEO update. Global growth is forecast to
for economic growth prospects and inflations. As
decline to about 3.3 percent over the medium
per the United Nations (UN) publication ‘World
term beyond 2023.
Economic Situation and Prospect 2022’, the
global economy grew by 5.5 percent in 2021, the Macroeconomic Situation: Bangladesh
highest growth rate since 1976, after contracting Context
3.4 percent in 2020. Global economy is expected
Bangladesh economy was growing consistently
to grow by 4.0 percent in 2022 and 3.5 percent in
high over a decade crossing 7.0 percent milestone
2023. In the World Bank’s Global Economic
in FY 2015-16 and 8.0 percent milestone in FY
Prospect, January 2022, the global economic
2018-19. However, the COVID-19 pandemic
growth is projected 4.1 and 3.2 percent in 2022
reduced the growth rate to 3.45 percent in FY
and 2023 respectively, while growth was
2019-20. The economy grew by 6.94 percent in
estimated 5.5 percent in 2021.
FY 2020-21. According to the provisional
Sluggish growth rates between advanced estimates of BBS, the GDP growth stood at 7.25
economies and emerging and developing percent in FY 2021-22, 0.05 percentage point
economies will be divergent. Growth in advanced higher than the target rate and 0.31 percentage
economies is expected to decline from 5 percent point higher than the previous fiscal year.
in 2021 to 3.8 percent in 2022 and 2.3 percent in
According to provisional estimate of BBS, per
2023. This growth rate will be sufficient to
capita GDP and per capita national income stood
restore output and investment to their pre-
respectively at US$ 2,723 and US$ 2,824 in FY
pandemic trend in these economies. In emerging
2021-22 compared to US$ 2,462 and US$ 2,591
and developing economies, however, growth is
respectively in FY 2020-21. The consumption
expected to drop from 6.3 percent in 2021 to 4.6
increased to 78.44 percent of GDP in FY 2021-
percent in 2022 and 4.4 percent in 2023. The
22 from 74.66 percent in FY 2020-21. The gross
report stressed that by 2023, all advanced
investment stood at 31.68 percent of GDP in FY
economies will have achieved a full output
2021-22, where public investment and private
recovery; yet output in emerging and developing
investment accounted for 7.62 percent and 24.06
economies will remain 4 percent below its pre-
percent of GDP respectively. Medium-term
pandemic trend. For many vulnerable economies,
forecasts for GDP growth rates are 7.5 percent in
the setback is even larger: output of fragile and
FY 2022-23, 7.8 percent in FY 2023-24 and 8.0
conflict-affected economies will be 7.5 percent
percent in FY 2024-25.

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Bangladesh Economic Review 2022

Inflation in FY 2020-21 stood at 5.56 percent, of FY 2021-22 (up to February 2022) amounted
which is 0.09 percentage point lowers than FY to US$ 5,899 million, up by 6.63 percent from
2019-20. Of which food and non-food inflation the same period of the previous fiscal year. The
accounted for 5.73 percent and 5.29 percent country's external debt outstanding at the end of
respectively. Like all other countries of the February 2022 was US$ 55,826 million or 12.23
world, an upward trend of price level is being percent of GDP.
observed in Bangladesh as the economic
The purpose of this policy stance is to outline
damages created by COVID-19 pandemic which
monetary and credit programme for FY 2021-22
is triggered by war in Ukraine. The point-to-point
based on the evolving internal and external
inflation in March 2022, stood at 6.22 percent,
macroeconomic and financial developments. The
compared to the inflation rate 5.47 percent in
programmed growth of broad money (M2) was
March 2021.
set at 15.0 percent and domestic credit growth
The revised revenue mobilisation target was set 17.8 percent, which was consistent with the
at Tk. 3,89,000 crore in FY 2021-22, which is targeted GDP growth and CPI based average
9.78 percent of the GDP. Of them, revenue inflation. The broad money and domestic credit
receipt from NBR sources was marked at Tk. actually grew by 9.45 percent and 13.32 percent
3,30,000 crore (8.30% of GDP), tax revenue respectively in February 2022 compared to 13.35
from non-NBR sources at Tk. 16,000 crore percent and 9.06 percent respectively in the same
(0.40% of GDP) and non-tax revenue at Tk. month of the previous year. However, the public
43,000 crore (1.10% of GDP). As per provisional and private sector credit experienced 28.1 percent
data from iBAS++, total revenue mobilisation up and 10.9 percent growth respectively in February
to February 2022 stood at Tk. 2,25,116 crore, up 2022 against the actual growth of 8.3 percent and
by 16.39 percent of the same period of previous 8.9 percent respectively in February 2021.
fiscal year, achieving 57.87 percent of the target.
The recent trends in weighted average lending
According to the revised budget, the total and deposit rates show downward movement.
expenditure target for FY 2021-22 has been set at The weighted average lending rate decreased to
Tk. 5,93,500 crore (14.93% of GDP), which is 7.10 percent at the end of February 2022 from
10.11 percent higher compared to FY 2020-21. 7.48 percent of end February 2021. Similarly, the
The revised Annual Development programme deposit rate continuously decreased to 4.02
(ADP) size for FY 2021-22 stood at Tk. 2,07,550 percent in February 2022 from 4.44 percent in
crore (excluding autonomous/agencies/ February 2021. The reduction in market-based
corporations' own funded projects), which is 5.01 interest rates has been due to the increase in
percent higher than the previous fiscal year. excess liquidity available to banks and the
reduction in interest rates, bank rate and
The government is highly concerned of
refinancing scheme policies adopted by
maintaining the budget deficit within 5 percent of
Bangladesh Bank.
GDP by increasing efficiency in revenue
management. However, due to the increase in In FY 2021-22, both stock markets (Dhaka Stock
government expenditure for COVID-19 Exchange and Chattogram Stock Exchange)
pandemic, target set at 5.1 percent of current noticed some volatility, however, both the price
fiscal year. The actual budget deficit for FY index and market capitalisation increased
2019-20 and FY 2020-21 stood at 4.7 percent and moderately. The market capitilisation and the
4.3 percent of GDP respectively. The inflow of broad index of DSE increased by 4.41 percent
foreign grants and loans in the first eight months and 6.59 percent respectively at the end of April

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Bangladesh Economic Review 2022

2022 compared to end June 2021. Similarly, the decrease slightly. The foreign exchange reserve
market capitalisation and CSE All Share Price stood at US$ 46 billion at the end of February
Index increased by 6.03 percent and 11.67 2022. At the latest on 18 May 2022, the foreign
percent respectively, at the end of April, 2022, exchange reserve stood at US$ 42.33 billion.
compared to end June 2021. During July-April, 2022, the exchange rate of
Taka depreciated by 1.9 percent against US
Although global trade has turned around in 2021
dollar.
after the effects of COVID-19 pandemic, the
Russia-Ukraine conflict has been showing Sector-wise Economic Progress
significant negative impact on world trade. As a
In response to the effects of the global COVID-
result, food supply chains have been disrupted
19, extreme floods, and natural disasters, GOB
and Western sanctions on Russia have led to
has adopted short, medium, and long-term action
global trade instability. At the same time, the
plans to maintain food security for the people of
prices of petroleum along with commodity prices
the country by continuing the expansion in
are rising, which is also creating inflationary
agricultural productivity. The target of food
pressures on the economies. However,
production is 465.83 lakh metric tonne (MT) in
Bangladesh's export growth is on a positive trend.
FY 2021-22, which was 466.35 lakh MT in FY
During July-April of FY 2021-22, total export
2020-21. Revised budget target for food
earnings increased by 35.14 percent to US$
collection from internal market is 19.50 lakh MT.
43,344.34 million compared to the same period
By February 2022, 10.59 lakh MT food grain was
of previous fiscal year. The total import
imported through government channel and 27.69
payments (c&f) stood at US$ 66,898.70 million
lakh MT (3.04 lakh MT rice and 24.65 lakh MT
in FY 2021-22 (July-March), which is 43.84
wheat) through private channel. With a view to
percent higher than the import payments of the
increase in agricultural production, Tk. 9,500
same period of the preceding fiscal year. The
crore has been allocated for subsidising fertilisers
deficit of trade balance widened and stood at US$
and other agricultural activities and Tk. 150 crore
22,306 million in FY 2021-22 (July-February)
has been allocated for seed production activities
which was US$ 12,359 million in FY 2020-21
to support the farmers in the budget of FY 2021-
(July-February). This deficit mainly occurred by
22. A total of 46.21 lakh MT of fish was
the high growth in import payments relative to
produced from inland water bodies and marine
the growth in export earnings.
sources in FY 2020-21, which is targeted 46.64
During the time, current account balance showed lakh MT in FY 2021-22. In FY 2020-21, 31.16
a deficit of US$ 12,834 million due to expansion crore dose vaccines for 17 diseases have been
of trade deficit and a fall of workers’ remittances. produced and applied for cattle and poultry.
At the same time, the surplus of capital account
To overcome the shock of COVID-19 as well as
balance and financial account balance both
to revitalise, GOB has provided different
increased due to substantial amount of term loans
supports under incentives packages to its industry
received from the global development partner
sector. Special fund for export oriented
agencies. The net outcome of all these made the
industries, working capital for the affected
overall balance a deficit of US$ 2,222 million in
industries and service sector institutions, working
FY 2021-22 (July-February) compared to US$
capital to SMEs, credit guarantee skims for
6,879 million surplus in the same period of
SMEs are mentionable programmes of the GOB.
previous fiscal year. Due to the deficit of the
As a result, industry sector has rebounded.
overall balance, the foreign exchange reserve
According to the ‘Quantum Index of Medium

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Bangladesh Economic Review 2022

and Large Scale Manufacturing Industry’ (Base length of highways in the country is 22,433 km
Year: 2005-06), the average general index of as of February 2022. Parallel to the roads,
industrial production (large and medium scale development projects like Padma Bridge, Metro-
manufacturing) increased by 18.52 percent to rail, BRT, Dhaka Elevated Express way,
507.65 points during July-December of FY 2021- Karnaphuli tunnel and some other mega-projects
22 over that of FY 2020-21. are being implemented which are contributing to
GDP growth of the country. At present, the total
The capacity of power generation reached at
length of railway is 3,093 km. Several measures
22,066 megawatts in January 2022. The volume
have already been undertaken for the
is 25,284 megawatts including renewable energy
development and maintenance of navigability of
and captive. The maximum generation level
different river routes, ensuring safe movement of
13,792 MW were achieved in 27 April 2021.
water crafts, development of inland river ports,
Total net electricity production was 80,423
creating infrastructure facilities to carry container
million kilowatt-hours (kWh) in FY 2020-21 and
goods in inland waterways etc. As the national
in the first six months of FY 2021-22 (up to
flagship carrier Biman Bangladesh Airlines
December 2021) total net electricity production
Limited is operating 7 national and 19
stood at 42,395 million kWh. Out of total net
international flights in different routes. The total
generation, 40.02 percent power was generated
number of mobile phone subscribers and internet
by the public sector, 4.10 percent by joint
users exceed 18.15 crore and 12.28 crore in
venture, 47.39 percent power from the private
February 2022 respectively. At present
sector and 8.50 percent from power import from
Bangladesh Submarine Cable Company Ltd.
India. At present, the total distribution line is
(BSCCL) alone satisfying about 60 percent
6.19 lakh kilometer and total consumer is 4.19
demand in the case of country’s overall internet
crore. The construction of Ruppur Atomic Power
bandwidth, whose amount is 2,060 (Gigabyte per
Plant unit is ongoing.
second) up to 28 February 2022.
Natural gas met almost 62 percent of the
The government is committed to ensure the basic
country's total commercial use of energy. A total
needs of the people as well as human resource
of 28 gas fields have been discovered from which
development through economic reform focusing
about 19.11 trillion cubic feet gas has been
on life and livelihoods to combat the long-term
produced cumulatively (up to December 2021).
effects of the COVID-19 pandemic. In FY 2021-
9.30 trillion cubic feet of recoverable gas by
22, the government has spent about 24.93 percent
January 2022. Besides, the country has about
of the sectors related to human resource
13.60 lakh metric tonne of reserve fuel oil. In
development such as education and technology,
order to meet the growing demands for natural
health and family welfare, women and children,
gas and fuel oil and to secure energy supply of social welfare, youth and sports development,
the country in the long term, the highest culture, labour and employment etc. In order to
emphasis is given on the diversification of energy build a skilled manpower to meet the challenges
sources, particularly on the efficient and of the Fourth Industrial Revolution, maximum
optimum use of energy, construction of power emphasis has been laid on technical education.
plant based on coal, LNG, duel fuel, atomic and Through The National Deployment and
renewable energy. Vaccination Plan work is underway to vaccinate
The development efforts to build a developed and 70 percent of the population against COVID-19
integrated communication and transport to protect lives and prevent deaths from the
infrastructure is going on. At present, the total COVID-19. Various reform initiatives, including

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Bangladesh Economic Review 2022

as financial sector reform, anti-corruption and 77 industries are in to the process of operation.
preventative actions are being adopted and Up until now, the total investment amount in the
executed in order to promote balanced EPZs is US$ 5,858.02 million. Total number of
development and establish good governance. employment generation is 4,80,140 up to
February 2022 in the EPZs where 66 percent
Bangladesh undoubtedly has accomplished an
workers are female. By this time, the location and
extraordinary and substantial advancement in
the land for 97 economic zones have been
poverty mitigation amid last decade, consequence
approved, 68 will be public and 29 will be
of the devoted endeavors of the government and
private. Under public–private partnership
the appropriate and successful execution of
modality, 78 projects are approved in principle
numerous public and private development
covering 10 sectors.
activities. It is worth mentioning that according
to Household Income and Expenditure Survey Like other developing countries, bio-diversity
(HIES) 2016, poverty rate declined to 24.3 rich Bangladesh is combating against
percent in 2016, which was 40.0 percent in 2005. environmental degradation, a crucial challenge
Several poverty alleviation programmes in for Bangladesh. Efforts are continuing to
Bangladesh meant to address poverty alleviation integrate issues pertaining to environment with
directly or indirectly have been launched by the mainstream development policies to ensure
incumbent government. Apart from these, economic growth and environmental
different government along with non-government sustainability. A number of policies and
institutions, autonomous bodies carried out development plans have been adopted and are
various activities involving introducing being implemented to encounter environmental
microcredit in order to expedite the government’s hazards and to ensure a pollution-free eco-
efforts of poverty reduction. The ubiquitous friendly environment. Furthermore, a detailed
COVID-19 pandemic had detrimental work plan has been formulated with a view to
consequences on economic activities in achieving environmental targets of Sustainable
Bangladesh to some extent while the country was Development Goals (SDG’s). ‘Bangladesh
in a position to achieve commendable progress Climate Change Strategy and Action Plan, 2009
on various economic and social indicators. (BCCSAP 2009)’ is being implemented to
Nevertheless, with regard to adaption of address the impact of climate change where both
pragmatic and prudent economic policies adaptation and mitigation activities have been
anything could hardly hinder the celerity of considered. National Environmental Policy,
overall economic development in Bangladesh. 2018, Bangladesh Biodiversity Act 2018,
Therefore, the poverty situation in Bangladesh Environmental Crisis Management Rules, 2017
did no longer worsen to a scale of catastrophe have been promulgated to take into account the
during the pandemic. challenges of environment, biodiversity
conservation and management. The government
During January-September in 2021, the amount
is also implementing various programmes/
of FDI was US$ 1,803.4 million. A total 763
projects in order to tackle eventualities emanating
projects were registered in FY 2021-22 (July-
from natural disasters. A masterplan for coming
February period) under joint venture investment
20 years with the objectives of maintaining
(local and foreign) and the amount involved with
environmental sustainability and achieving self-
the proposal was Tk. 1,08,022 crore. Total 454
sufficiency in forest resource is under
business institutions are ongoing with production
preparation.
in the existing 8 EPZs of the country. Additional

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