Per capita GDP for Bangladesh higher than India till 2022, says IMF

Bangladesh continues to have a higher per capita gross domestic product (GDP) when compared to India till 2022, according to the latest data from International Monetary Fund (IMF).

However, the agency estimates that India will have an edge over Bangladesh in the next two years, retaking the lead at least till 2028.

The primary reason for such a trend in Bangladesh could be increased growth fueled by strong external demand. Further, the country has not faced contraction even during Covid-19 pandemic.

On the other hand, despite having the fastest growth, India experienced a contraction in FY21, and growth is expected to slow down during the current fiscal year when compared to the previous fiscal year.

Bangladesh's rapid economic growth

Former Chief Economic Advisor and former Chief Economist of the World Bank, Kaushik Basu, commented on the trend, saying that with the new World Bank-IMF data coming in, it is clear that Bangladesh's per capita income has been higher than India's since 2019.

“This would have been unthinkable 10 years ago. We mustn’t grudge a developing nation doing well. But we must pay more attention to data and science,” Basu tweeted.

According to the World Bank's country overview for Bangladesh, the country has a proven track record of growth and development, even during periods of high global uncertainty.

"A robust demographic dividend, strong exports of ready-made clothing, resilient remittance inflows, and stable macroeconomic conditions have supported rapid economic growth over the past two decades," World Bank said.

One of the fastest-growing economies

On Sunday, the IMF reported that its staff team had returned from Dhaka. Rahul Anand, the IMF's Mission chief for Bangladesh, then made a statement that read, "Against a challenging economic backdrop, Bangladesh remains in the Asia-Pacific region."

However, the statement pointed out that ongoing inflationary pressures, increased financial volatility on a global scale, and a slowdown in the major advanced trading partners continue to have an adverse impact on economic growth, foreign exchange reserves, and the taka (the country's official currency).

Meanwhile, the Asian Development Bank (ADB) has reduced Bangladesh's GDP growth forecast for FY24 to 5.3 per cent, down from 7.1 per cent in the previous fiscal year.

In its latest Asian Development Outlook, ADB says the slower growth forecast reflects subdued domestic demand and weaker export expansion as a result of the Russian invasion of Ukraine.

"The main risk to this growth projection is a greater economic slowdown in Bangladesh's major export destinations, which is driven by global uncertainty over the prolonged political tensions," ADB said.

India's growth forecast

For India, the ADB cut its FY24 growth forecast to 6.4 per cent from 7.2 per cent (as announced in December). "The moderation in growth in FY23 is premised on the ongoing global economic slowdown, tight monetary conditions, and elevated oil prices," the agency stated.

The World Bank has also lowered its growth forecast to 6.3 per cent from 6.6 per cent, while the Reserve Bank of India (RBI) has increased its forecast to 6.5 per cent from 6.4 per cent.