Bangladesh has recently been upgraded to lower-middle income status by the World Bank based on per capita income. While Bangladesh aspires to become a middle income country by 2021 according to UN standards, the document examines whether this is realistic. It notes that Bangladesh's economy continues to perform well with macroeconomic stability and declining interest rates. However, the document argues that for sustainable growth, Bangladesh must increase public spending on education and healthcare, which are currently among the lowest levels relative to GDP compared to other countries at Bangladesh's income level. Strong reforms in infrastructure, energy, and finance will also help Bangladesh achieve middle income status.

1. “Bangladesh is Moving Towards
Middle Income Country”
Myth or Reality ?
© Riadh Mohammed Arif

2. Highlights
 This year Bangladesh has been upgraded from low income country (LIC) to
Lower middle income country (LMIC) as per World Bank’s classification
based on per capita income.
 Bangladesh aspires to emerge Middle Income Country (MDC) from Less
Developed Country (LDC) by 2021 as per United Nation’s classification.
Now it’s very important to assess whether this is reality or myth.
 Bangladesh’s economy continues to do well. Macro & Micro environment
remain stable, declining interest rate and disinflation are playing vital role
in stabilizing the economy.
© Riadh Mohammed Arif

3. Highlights
 Increasing public expenditure on education and health care will lead
sustainable growth.
 Strong structural reform through mega infrastructural projects, increasing
energy production, efficiency in financial sector can help to achieve the
goal.
© Riadh Mohammed Arif

4. Positivity in Sustainable Development
 World Bank ranked among the top 12 developing countries with a
population of over 20 million, who achieved above 6% growth in
recent years and expected to continue in the future.
 International Monetary Fund (IMF) forecast Bangladesh will record
second (2nd) height growth in the world in 2019 with 7% growth
rate.
 Goldman Sachs classified Bangladesh among next 11 economics
identified for having great opportunities for investment in foods and
beverages, technology, textiles, leather tanning and real estate.
 PWC’s projection association with World Bank Bangladesh’s economy
will be the 23rd in the world in terms of GDP at PPP with a value
of USD 3367 billion by 2050.
© Riadh Mohammed Arif

5. Towards the Reality
For sustainable economic growth we need to work a lot specially with education sector
and health care sector. Because public expenditure as a percentage of GDP on these two
sector accelerate sustainable economic growth.
© Riadh Mohammed Arif

6. Towards the Reality (Cont’d)
In Figure 1 and Figure 2, we have presented two scatter-plots involving public
expenditure on education as a percentage of the GDP and public expenditure on
health as a percentage of the GDP respectively against Per Capita Income for the
lower-middle income countries and upper-middle income countries as per the World
Bank's classification.
The data are the averages for the years between 2010 and 2015 and they are derived
from World Bank's data archive. Black line in figure 1 & 2 represent average public
expenditure as % of GDP on education & health respectively in Lower-middle income
countries. Green in figure 1 and Violate in figure 2 represent average public
expenditure as % of GDP on education & health respectively in upper-middle income
countries.
© Riadh Mohammed Arif

7. Towards the Reality (Cont’d)
Red dot in both figure represent Bangladesh’s position. Interestingly in both cases
Bangladesh appears to be in worst performing countries among the other lower-
middle income countries.
If Bangladesh wanted to continue sustainable development the current allocations for
education and health expenditure as percentage of the GDP need to be almost
doubled from their current levels. The efficiency of the public expenditure on
education and health in Bangladesh needs to be improved. Otherwise jobless
development will lead Bangladesh to worst position in the long term.

8. Towards the Reality (Cont’d)
 If we consider the macro-economy environment in June’16 inflation declined to
5.33% YOY basis. Food inflation in June’16 decreased to 4.8o% which was 29%
lower than last year whereas non-food inflation increased to 7.5% which indicates
expenses on non-food items increased.
 Interest rate decline attracts private sector to invest more.
 Mega infrastructural projects like Padma bride, metro rail will lead more efficiency
in overall economic activity in coming years.
 The balance of payment (BoP) remains comfortable with a large surplus in both
current and financial accounts, due to recovery in export, increased Foreign Direct
Investment and aid disbursements.
© Riadh Mohammed Arif

9. So after analyzing the information and overall economy we can say that-
“Bangladesh is Moving Towards Middle income Country”
Ultimate Decision
© Riadh Mohammed Arif