Bangladesh's trade-GDP ratio falls gradually despite economic growth

17 Aug '23

2 min read

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The ratio of Bangladesh's international trade to its growing economy has halved in the last decade, with exports and imports as a percentage of GDP falling despite the economy growing by 6.5 per cent annually.
The ratio of import to GDP—21.2 per cent in FY14—halved to 10.69 per cent in 10 years; that of export to GDP fell from 17.2 per cent to 7.66 per cent.

The ratio of Bangladesh's international trade to its growing economy has halved in the last decade, with exports and imports as a percentage of its gross domestic product (GDP) gradually falling despite the economy growing by 6.5 per cent annually.

The ratio of import to GDP—21.2 per cent in fiscal 2013-14—halved to 10.69 per cent in 10 years, while the ratio of export to GDP fell sharper from 17.2 per cent a decade ago to 7.66 per cent in fiscal 2022-23, according to data by the Bangladesh Economic Review 2023.

Analysts say this implies entrepreneurs from the country lack appetite to try their products in the global market.

Zahid Hussain, former lead economist at the World Bank in Dhaka, said one reason behind the drop could be an inward-looking industrialisation strategy. There is high tariff protection for domestic market-oriented industries that prevent entry of foreign products. This makes profits from business in the domestic market protected, he told a domestic news outlet.

Therefore, entrepreneurs investing in the domestic market in lieu of competing for selling products in the international market is an obvious conclusion, he said.

Offering high tariff protection reduces the incentive to turn efficient, he said, adding that export to GDP ratio would have risen had the government focused on export diversification.

The trend is a bad sign as payment of import bills, building of foreign exchange reserves and servicing debt is related to imports, said Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue.

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