Bangladesh’s manufacturing sector may see strong investment

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Labour intensive producers like Bangladesh would be benefitted from a change in market share in major low end goods thanks to China that moved up the value chain, according to a latest report by International Monetary Fund (IMF).

Goods like apparel, footwear, furniture and plastic toys would be the major areas having opportunities for the country.

Bangladesh, however, will have to compete with Vietnam and Cambodia to grab a fair share of the market opportunities. Vietnam already remains ahead of Bangladesh in terms of market share while Cambodia just behind Bangladesh, according to the report.

IMF today released the report titled “2016 Asia and Pacific Regional Economic Outlook”, expecting Bangladesh’s growth to accelerate to 6.6% in 2016 and to 6.9% in 2017, helped by lower commodity prices and strong investment in the manufacturing sector.

The forecast, however, remains well below the government’s high hope that the GDP growth would be more than 7% in the current fiscal year.

The IMF report said growth in frontier economies and small states has, on average, been relatively robust and steady over the past couple of years, though there have been variations.

Bangladesh, for example, experienced solid growth (6.4%) in 2015 as it continued to benefit from lower commodity prices and strong FDI inflows.

The frontier economies and small states are expected to continue to record steady growth, said the report.

It said growth in Asia and the Pacific is expected to remain strong at 5.3% this year and next, accounting for almost two-thirds of global growth. Despite a slight moderation, Asia remains the engine of global growth.

While external demand remains sluggish, domestic demand continues to show resilience across most of the region, driven by low unemployment, growth in disposable income, lower commodities prices, and macroeconomic stimulus.

“Of course, Asia is impacted by the still weak global recovery, and by the ongoing and necessary rebalancing in China,” said Changyong Rhee, director of the Asia-Pacific Department at the IMF.

“But domestic demand has remained remarkably resilient throughout most of the region, supported by rising real incomes, especially in commodity importers, and supportive macroeconomic policies in many countries.”

However, the region faces a number of external challenges, including slow growth in advanced economies, a broad slowdown across emerging markets, weak global trade, persistently low commodity prices, and increasingly volatile global financial markets.

These risks compound domestic vulnerabilities, such as high debt incurred in recent years. In the short term, China’s transition to a new growth model will disrupt its regional partners, especially those heavily exposed to the region’s biggest economy, said the report.


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