- After trailing its big neighbour for four decades, Bangladesh has gone ahead of India in economic growth and on social development indicators.
- In the three years ending 2016, Bangladesh’s gross domestic product (at current prices) in dollar terms grew at a compounded annual rate (CAGR) of 12.9 per cent, more than twice India’s 5.6 per cent. Over the same period, Pakistan grew faster than India too, at a CAGR of 8.6 per cent, driven by a surge in investment and export. The Chinese economy expanded at an annualised 5.2 per cent.
- Bangladesh is also ahead of India in the human or social development indicators of infant mortality rate and life expectancy at birth. A newborn in Bangladesh is more likely to see her fifth birthday than her Indian or Pakistani counterpart. She is also likely to live longer in Bangladesh (72.5 years) than India (68.6 years) and Pakistan (66.5 years).
- Bangladesh’s economic success lies in its ability to plug itself into the gap created by the slowdown in the Chinese export engine as policymakers in Beijing shift their focus to pushing domestic demand and investment and away from exports. Total exports from China declined to $2.2 trillion in 2016 from a record high of $2.35 trillion three years ago, creating space for others in the global market for labour intensive consumer goods.
- India missed this bus as evidenced by a contraction in exports during the period. Instead the country’s growth is being largely driven by consumption even as savings, investment and exports reduce.
- India’s total exports of goods & services declined to $433 billion in 2016 from record high of $488 billion during 2013 calendar year.
- The contrast shows in the Bangladesh’s headline statistics.
- In last three years, the country’s exports of goods & services grew at a CAGR of 7 per cent in dollar terms against 3.9 per cent annualised contraction in India’s export during the period. In the same period, capital formation or investment in Bangladesh grew at a CAGR of 14.5 per cent against investment stagnation in India.
- Economic growth in Pakistan is largely driven by capital formation and consumption demand financed by a surge in foreign investments mostly from China as the latter invests close to $60 billion in upgrading Pakistan’s power and transport infrastructure.