Dhaka, January 12, 2019 —IFC, a member of the World Bank Group, has launched a diagnostic report which highlights the need to diversify Bangladesh’s export basket in order to sustain accelerated economic growth, increase investment opportunities, and create more jobs, particularly for women.
Bangladesh’s GDP has enjoyed an annual growth rate of 7.3 to 7.9 percent in the past two years (2018-19), with over two million new entrants joining the labor force every year. However, the country’s export earnings in the first five months of the 2019-20 fiscal year stood at $15.77 billion, which was 12.59 percent less than the target and 7.6 percent lower year-on-year.
The report “Building Competitive Sectors for Export Diversification: Opportunities and Policy Priorities for Bangladesh”, reveals that a diversified export portfolio comprising competitive sectors, such as leather and footwear, plastics, and light engineering, will help create greater access to international markets for Bangladeshi products. It provides recommendations for policymakers on strategy development to integrate priority sectors with the global value chain.
“To sustain its growth trajectory and reduce overdependence on any single item, Bangladesh needs to build a strong manufacturing ecosystem and develop new products, while paving the way for large scale job creation and poverty reduction,” said Wendy Werner, IFC Country Manager for Bangladesh, Bhutan and Nepal.
The IFC publication compares Bangladesh’s export performance to several comparator countries, including Vietnam, Cambodia, Malaysia, China and India, to identify where Bangladesh can improve. It considers economic factors like employment generation, women’s employment, growth of small and medium enterprises, and foreign direct investment needed in seven potential sectors for export diversification.
“Bangladesh’s economy is moving forward at a stable pace. The government has launched a concerted effort to diversify its exports and we sincerely hope this pioneering publication will help inform the policy discourse on sustainable export-led growth,” said Dr. Mashiur Rahman, Adviser to the Prime Minister for Economic Affairs and chief guest at the publication launch in Dhaka.
The special guest, Dr. Mohammad Jafar Uddin, Secretary, Ministry of Commerce, said “Exporting is one pathway to leveraging the dynamic potentials of the global economy. We strongly believe that trade is a powerful engine of growth, not just for the world economy, but very much so for the developing economy of Bangladesh.”
This publication on export diversification, co-authored by Hosna Ferdous Sumi, IFC Private Sector Specialist, and Dr. Masrur Reaz, IFC Senior Economist, has been supported by Bangladesh Investment Climate Fund II, an IFC advisory project implemented in partnership with the UK Department for International Development.
At the launching event organized in cooperation with Policy Research Institute (PRI), Dr. Zaidi Sattar, Chairman of PRI, cautioned that most new products introduced by exporters are not sustained beyond the first year. He stressed the need to address export sustainability on priority basis as it is a critical challenge for maintaining diversification.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities where they are needed most. In fiscal year 2019, we delivered more than $19 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
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