The Bangladesh economy grew at 5.47% in FY21, recovering from the impacts of the COVID-19 pandemic, but still lower than pre-pandemic levels. The agriculture sector grew at a slower 3.45% due to pandemic impacts, while the industry sector grew at 6.12% and services at 5.61% due to government stimulus measures. Food production targets were mostly met but imports were higher than usual. The stock market and some economic indicators showed signs of recovery by the end of the fiscal year.
3. BOARD OF DIRECTORS FOR 2021
PRESIDENT
VICE-PRESIDENT
SENIOR VICE-PRESIDENT
SECRETARY-GENERAL & CEO
DIRECTORS
MS. NIHAD KABIR
MR. MD. SAIFUL ISLAM
MR. ANIS A. KHAN
MR. FAROOQ AHMED
MR. SYED TAREQUE MD. ALI
MR. MOHAMMAD NASER EZAZ BIJOY
MR. TAPAN CHOWDHURY
MS. UZMA CHOWDHURY
DR. ARIF DOWLA
MR. RUBAIYAT JAMIL
MR. HABIBULLAH N. KARIM
MR. ADEEB HOSSAIN KHAN, FCA
MR. HASAN MAHMOOD, FCA
MR. GOLAM MAINUDDIN
MR. SYED NASIM MANZUR
MS. SIMEEN RAHMAN
MR. KAMRAN T. RAHMAN
4. Chamber Building
122-124, Motijheel C/A, Dhaka-1000, Bangladesh
Phone : +880-2-223385208-10 & +880-2-223354129-31 (PABX)
Fax : +880-2-223385212 Email : sg@mccibd.org
Web : www.mccibd.org
VISION
g
Be the leading voice serving responsible business
MISSION
g
Become the leading Chamber for providing research and
analysis related to business in Bangladesh
g
Attract quality membership, representative of a cross
section of business
g
Effectively respond to changing business environment
g
Collaborate with local and international institutions
g
Engage and communicate regularly with our
stakeholders
g
Promote best practices that benefit business and society
VALUES
g
Fairness
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Integrity
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Respect
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Equal Opportunity
5. CORE COMPETENCIES -
ORGANIZATION
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Research based Policy Advocacy
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Networking
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Business Intelligence
CORE COMPETENCIES –
PEOPLE
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Innovative
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Adaptable
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Proactive
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Communication & Interpersonal Skills
The Bangladesh’s Economy During FY2020-21 (FY21) is
published for private circulation by Metropolitan Chamber
of Commerce and Industry, Dhaka. The Chamber assumes
no reponsibility for the correctness of items quoted in this
publication although every effort is made to give information
from sources believed to be reliable.
6. CONTENTS
Introduction 5
Economic Growth 6
Agriculture 8
Industry 12
Services 14
Capital Market 15
Investment and Savings 17
Monetary and Credit Development 18
Exports 20
Imports 24
Remittances 25
Balance of Payments 27
Foreign Aid 29
Foreign Direct Investment (FDI) 31
Foreign Exchange Reserve 32
Price Situation 33
Public Finance 35
Public Expenditure 36
Employment Situation 38
Budget for FY2021-22 (FY22) 40
Major Economic Indicators 42
Major Trading Partners 46
Export Performance (Goods) 47
7. Bangladesh’s Economy During FY21
5
Bangladesh’s Economy During FY21
Introduction
Bangladesh’s economy continues to fight back with the
spread of the COVID-19 pandemic since March 2020. As
a result, all major economic and social segments of the
country faced trouble in FY2020-21 (FY21), especially
affected heavily during the second wave of the pandemic.
The consequences of COVID-19 pandemic and multiple
lockdowns during FY21 pushed Bangladesh off its
growth trajectory. After achieving above 7.0 per cent
growth since FY16 to three consecutive fiscal years, GDP
growth reached 8.15 per cent in FY19 which was praised
worldwide. However, the COVID-19 pandemic poses
negative effects on the Bangladesh’s economy.According
to Bangladesh Bureau of Statistics (BBS), GDP growth
decelerated to 3.51 per cent in FY20, which has been
estimated to 5.47 per cent in FY21.
However, the economy has been showing some signs of
recovery during the second half of FY21. The stimulus
packages comfort the business groups, from large farms
to petty micro-enterprises, which eventually helped the
economy to boost again. Though the recovery period is
uncertain, but much depends on vaccination and the
strength of the global economy. Non availability of mass
vaccination may appear to be one of the critical factors
for slower economic recovery.
8. Bangladesh’s Economy During FY21
6
Economic Growth
In terms of US Dollar, the value of GDP in current market
prices increased by 9.88 per cent to US$355,037 million
in FY21 from US$323,111 million in the previous fiscal
year.Per capita GDP stood at US$2,097in FY21,compared
to US$1,930 in FY20, showing an increase of 8.65 per
cent. Per capita GNI also increased to US$2,227 in FY21
from US$2,024 in the previous fiscal year.
Per capita GNI
US$2,227 in FY21
US$2,024 in FY20
Per capita GDP
US$2,097 in FY21
US$1,930 in FY20
GDP
FY20 FY21 Increased
US$
323,111
Million
US$
355,037
Million
9.88%
9. Bangladesh’s Economy During FY21
7
Growth rates of different sectors and sub-sectors at
constant factor prices in the three most recent years are
shown below:
(per cent)
Sector/ Sub-sector FY19 FY20 FY21(P)
Agriculture: 3.92 4.59 3.45
Agriculture and Forestry 3.15 4.10 2.65
Fishing 6.21 6.02 5.74
Industry: 12.67 3.25 6.12
Mining and Quarrying 5.88 0.97 0.29
Manufacturing 14.20 1.80 5.77
Large and medium scale 14.84 1.39 6.56
Small scale 10.95 3.96 1.73
Electricity, Gas and Water 9.58 1.69 4.74
Construction 10.25 8.66 8.68
Services: 6.78 4.16 5.61
Wholesale and Retail Trade, Repair
of Motor Vehicles
8.14 4.03 6.54
Hotel and Restaurants 7.57 1.75 6.85
Transport, Storage & Communication 7.19 3.67 6.07
Financial Intermediation 7.38 3.09 4.31
Real-estate, Renting & Other
Business Activities
5.23 4.83 4.90
Public Administration & Defence 6.40 5.44 6.16
Education 7.66 5.06 5.56
Health and Social Work 11.79 9.97 9.94
Community, Social & Personal Services 3.72 3.01 3.05
GDP growth rate at constant
2005-06 market prices
8.15 3.51 5.47
Note: P denotes provisional
Source: Bangladesh Bureau of Statistics (BBS)
10. Bangladesh’s Economy During FY21
8
Agriculture
The agriculture sector, which is the most important
sector in the Bangladesh economy, employs about 39
per cent of the country’s total labour force. The share of
the sector in GDP, according to the provisional estimate
of the National Accounts Statistics, was 13.47 per cent
in FY21, compared to 13.74 per cent in the previous
fiscal year. It includes three sub-sectors namely: i) Crops
and horticulture, ii) Animal farming, and iii) Forest and
related services.
The favorable natural factors and strong government
support in terms of timely availability of inputs and
finance notwithstanding, the agriculture sector achieved
a lower growth of 3.45 per cent in FY21, compared to
11. Bangladesh’s Economy During FY21
9
4.59 per cent in FY20. Among its various components,
agriculture and forestry sub-sector, which includes crops
& horticulture, animal farming, and forestry & related
services, recorded a lower growth of 2.65 per cent in
FY21, compared to 4.10 per cent growth in the previous
fiscal year. On the other hand, the fisheries sub-sector
grew at 5.74 per cent in FY21, compared to 6.02 per cent
in FY20.
To tackle the economic losses caused by the COVID-19
pandemic,the government created a refinance scheme of
Tk.50.0 billion for the agriculture sector. Accordingly, the
Bangladesh Bank (BB) launched a Tk.50.0 billion stimulus
fund for agricultural farmers (small and medium) in
rural areas, including that of poultry, dairy and livestock
sectors. The BB later extended loan disbursement limit
to 40 per cent for a single sector which was 30 per cent
in the previous instruction. According to the latest data
from the BB, Tk.42.95 billion or 85.90 per cent of loan
was disbursed and the tenure of the scheme ended in
June 2021.
Domestic Food Production
The target of domestic food grains (rice and wheat)
production for FY21 was set by the Ministry of Agriculture
(MoA) at 41.06 million metric tons (mmt), which is 2.70
per cent higher than the FY20 target of 39.98 mmt. This
target was also 9.09 per cent higher than the actual
production in FY20 (37.64 mmt). The crop-specific
12. Bangladesh’s Economy During FY21
10
production targets in FY21 for aus, aman, boro and wheat
are 3.65 mmt, 15.61 mmt, 20.50 mmt, and 1.30 mmt,
respectively.
The Bangladesh Bureau of Statistics (BBS) has already
finalized the production of aus and aman at 3.29 mmt
and 14.44 mmt, respectively for FY21. On the other hand,
MoA projected boro and wheat production at 20.90 mmt
and 1.20 mmt, respectively for FY21.
Food Import
Total import of food grains (public and private) for FY21
was 6.70 mmt, of which rice was 1.36 mmt and wheat
was 5.34 mmt. In FY21, private sector imported 0.79
mmt of rice and 4.86 mmt of wheat - where as public
sector imported 0.57 mmt of rice and 0.48 mmt of wheat.
For FY21, the government imported 0.57 mmt of rice to
maintain secure public stock, and reduced rice import
duties from 62.50 per cent to 25 per cent considering rice
price stabilization and increased national availability.
This reduced tax was imposed during January 2021
to April 2021. For FY22, the public sector budgeted
importation of food grains was fixed for 0.9 mmt, of
which rice was 0.3 mmt and wheat was 0.6 mmt.
Domestic Food Procurement
During FY21, domestic food grains procurement under
the public food distribution system (PFDS) was 1.55 mmt,
13. Bangladesh’s Economy During FY21
11
in which rice was 1.45 mmt and wheat was 0.10 mmt.
Public procurement from boro 2021 season started from
28 April 2021 and it will continue up to 16 August 2021
with a target of 0.65 mmt boro paddy and 1.10 mmt of
boro rice (parboiled and atap rice), equivalent to 1.42
mmt in terms of rice. As on 30 June 2021, 0.26 mmt boro
paddy and 0.62 mmt of boro rice (parboiled and atap
rice) were procured, equivalent to 0.79 mmt in terms of
rice. According to the food budget of FY22, the target of
public food grains procurement was set at 2.04 mmt, of
which 1.89 mmt was rice and 0.15 mmt was wheat.
Public Stock
The closing public stock of food grains in June 2021 was
1.45 mmt. The average closing stock of food grains was
about 0.93 mmt of last fiscal year (FY21). The fiscal year
(FY21) started with a bit of lower opening stock, which
was 1.12 mmt in July 2020. Internal procurement from
last boro and aman was not satisfactory which caused
lower public stock in last fiscal year. Public food stock is
a vital factor for food price stabilization as well as public
food distribution system. To maintain a healthy stock as
well as food price stabilization, government is procuring
food grains from both internal and external sources.
At present, public stock has reached in satisfactory
level. Public stock will remain satisfactory level after
completion of ongoing rice importation and internal boro
rice procurement.
14. Bangladesh’s Economy During FY21
12
Industry
Despite the slower economic activities caused mainly
by COVID-19, the industry sector recorded a growth of
6.12 per cent in FY21, compared to 3.25 per cent in FY20.
Besides,the share of the industry sector in GDP increased
by 0.21 percentage points to 34.99 per cent in FY21 from
34.78 per cent in FY20.
Within the broad industry sector, the manufacturing
sub-sector recorded a growth of 5.77 per cent in FY21,
compared to the previous fiscal year’s 1.80 per cent.
Within manufacturing, the large and medium scale
industries sub-sector grew by 6.56 per cent in FY21,
compared to 1.39 per cent in FY20. The small scale
manufacturing industries grew lower rate at 1.73 per
cent in FY21 against 3.96 per cent in FY20. However, the
share of the manufacturing sub-sector in GDP increased
15. Bangladesh’s Economy During FY21
13
to 23.66 per cent in FY21 from 23.59 per cent in the
previous fiscal year. Within manufacturing, the share
of the large and medium scale industries sub-sector in
GDP year-on-year rose to 19.92 per cent in FY21 from
19.72 per cent, while small scale industries sub-sector
decreased to 3.73 per cent from 3.87 per cent.
Initially, the central bank provided Tk.300 billion of
the first phase for large industries and service sector
business entities on 5 April 2020.Additional Tk.30 billion
was added to this package to pay wages of workers for
July 2020. Then working capital facilities were enhanced
further to Tk.400 billion from the previous Tk.330 billion
as the second phase. The second phase started after 98
per cent implementation of the first phase as on 30 June
2021, according to BB. Implementation process of the
second phase of the stimulus package has started with
the inclusion of foreign-owned companies operating in
Bangladesh. The central bank has already sent limits to
all scheduled banks, like the previous year, for execution
of the second phase to help revamp the coronavirus-hit
economy.The borrowers,who availed assistance from the
first phase, would not be eligible for the second phase
in line with the BB’s policy. But loans of the borrowers
will continue in line with ‘bank-customer’ relationship,
paying 9.0 per cent interest rate. As per the BB’s policy,
the package will be continued for three years from 14
April 2020, while a borrower will be entitled to enjoy
interest subsidy at 4.5 per cent for maximum one year.
16. Bangladesh’s Economy During FY21
14
Services
The broad service sector includes the collective output
of the sectors, such as: i) wholesale and retail trade,
repair of motor vehicles, motor cycles and personal and
household goods, ii) hotels and restaurants, iii) transport,
storage and communication,iv) financial intermediations,
v) real estate, renting and business activities, vi) public
administration and defence, vii) education, viii) health
and social work, and ix) community, social and personal
services.
The sector,however,recorded a higher growth of 5.61 per
cent in FY21, compared to 4.16 per cent in the previous
fiscal year. Also the share of the services sector in GDP
increased to 51.53 per cent in FY21 from 51.48 per cent
in FY20.
17. Bangladesh’s Economy During FY21
15
Capital Market
Stocks in both Dhaka and Chittagong Stock Exchanges
performed well on 30 June 2021, the last trading session
of the fiscal year 2020-21 (FY21), despite the rising trend
of coronavirus infections and deaths in the country.
According to the market operators, the regulatory
decision to keep the market open amid countrywide
strict lockdown and keep the investment opportunity
of undisclosed money in the capital market had worked
behind the rise of the market.The DSEX, the prime index
of the Dhaka Stock Exchange (DSE), rose about 108
points or 1.78 per cent to settle at 6,150, which was the
highest in 41-months. The two other indices - the DS30
index and the DSE Shariah Index (DSES) - also followed
the suit to close at 2,208 and 1,314 points, after rising
22.55 points and 16.35 points, respectively. On the other
hand, all indices of the Chittagong Stock Exchange (CSE)
also ended higher.
Earlier, experts and stakeholders, however, have hailed
the regulatory reforms brought in rules and the actions
taken against the wrong doers to enhance good
governance in the capital market. Their evaluation came
on completion of one year of the securities regulator’s
incumbent commission.According to them,the incumbent
commission did many good things to restore investors’
confidence. The regulator took initiatives including
18. Bangladesh’s Economy During FY21
16
adopting the policyof clearing IPO (Initial PublicOffering)
proposals within quickest possible time frame based
on merits, imposed large amounts of penalty on many
manipulators along with restructuring the boards of
many weak companies. Besides, the commission has also
compelled the sponsor-directors of the listed companies
to comply with the rules of holding minimum two per
cent shares. Apart from this, the regulator has framed
rules to create a market stabilization fund worth Tk.210
billion.The fund will come from the listed companies’un-
distributed dividends and unclaimed shares.The experts,
however, expect that the securities regulator should
increase its control over the market manipulators. The
regulator, however, should not intervene in the market
frequently. The market should be allowed to go forward
as per its own strength.
Recently, the securities regulator has introduced the
provision of allowing foreign companies as the sponsor
of mutual funds (MFs) in a bid to make the funds’
19. Bangladesh’s Economy During FY21
17
operations vibrant. It has also instructed the merchant
bankers to accelerate their efforts to make the share
supply side stronger as the demand of the quality shares
is increasing. Apart from the reforms, the commission is
also working abroad as the ambassador of the country’s
economy to attract foreign investors.
Investment and Savings
Historically, Bangladesh has remained a low-saving
and low-investment country. The rate of growth of
both savings and investment has also been very slow.
As proportion of GDP, gross investment recorded at
29.92 per cent in FY21 from 30.47 per cent in FY20. The
share of private investment in GDP recorded at 21.25
per cent in FY21 from 22.06 per cent in FY20, whereas
the share of public investment rose to 8.67 per cent of
GDP in FY21 from 8.41 per cent in FY20. The low level
of private investment, local and foreign, is largely due
to the underdeveloped infrastructure and such other
impediments as lack of adequate energy and weak
transmission infrastructure, lack of consistency in policy
and regulatory frameworks, scarcity of industrial land,
corruption, and non-transparent and uneven application
of rules and regulations. The government needs to
address these impediments to attract more foreign direct
investment (FDI) to the country in order to ensure the
country’s economic recovery from the ongoing COVID-19
pandemic.
20. Bangladesh’s Economy During FY21
18
Domestic saving as proportion of GDP increased by 0.40
percentage points to 24.17 per cent in FY21 from 23.77
per cent in FY20. The national savings ratio also rose to
30.39 per cent in FY21 from 28.67 per cent in FY20.
Monetary and Credit Development
Bangladesh Bank’s monetary policy, outlined in all
successive Monetary Policy Statements (MPS), has
been claimed to be growth supportive and aimed at
preserving price stability and generating employment.
The expansionary and accommodative monetary and
credit policies come for the current fiscal year against
the backdrop of the COVID-19 situation that hurt our
economic activity much. The expansionary monetary
policy aims to recover the corona-ravaged economy
through injecting cheaper money into it. In pursuit of
the growth objective, BB’s credit policies and programs
21. Bangladesh’s Economy During FY21
19
were directed to channeling adequate credit flows for
productive purposes, especially to underserved sectors
like agriculture, SME, renewable energy and other eco-
friendly projects. At the same time, BB’s policy was to
discourage undue expansion or diversion of bank credit
to unproductive and wasteful uses in order to bring down
the inflationary pressure. To bring the economy back in a
situation seen previously would be a challenge until the
coronavirus disappears permanently.
According to BB data, broad money (M2) recorded a
higher growth of 13.60 per cent at the end of June 2021
compared to 12.64 per cent growth achieved at the end
of June 2020. Domestic credit, on the other hand, grew
by 10.05 per cent at the end of June 2021, while a higher
rate of growth of 14.02 per cent was recorded at the end
of June 2020. Among components of domestic credit,
private sector credit registered 8.32 per cent growth
during the period between June 2020 and June 2021,
compared with a higher growth of 8.61 per cent during
Private Sector
Credit Growth
8.32% in FY 21
8.61% in FY 20
Domestic
Credit Growth
10.05% in FY 21
14.02% in FY 20
Public Sector
Credit Growth
18.95% in FY 21
53.97% in FY 20
22. Bangladesh’s Economy During FY21
20
the period between June 2019 and June 2020. Private
sector credit growth was also much below the central
bank’s target of 14.80 per cent in June 2021, set in the
monetary policy for the fiscal year 2020-21 (MPS, FY21,
p.15). Public sector credit, on the other hand, recorded
a growth of 18.95 per cent at the end of June 2021,
compared with a much higher growth of 53.97 per cent
at the end of June 2020. This June’s growth was much
lower compared with the BB’s target of 44.40 per cent in
June 2021 (MPS, FY21, p.15). Within public sector credit,
credit to government (net) recorded a growth of 21.57
per cent, and credit to other public sector recorded a
growth of 2.74 per cent, during the period under review.
Exports
Export earnings (merchandise) in FY21 increased by
15.10 per cent to US$38.76 billion from US$33.67 billion
in the previous fiscal year (FY20), buoyed by a revival in
the shipment of readymade garment (RMG) items amid
from the pandemic-induced business slowdown. Year-
on-year, RMG sector rose by 12.55 per cent to US$31.46
billion in FY21, however, missed the target by 6.89 per
cent, according to the Export Promotion Bureau (EPB)
latest data. Export earnings, however, fell short of the
target (US$41.00 billion) by 5.46 per cent.
The single-month export earnings in June 2021 (US$3.58
billion), however, increased by 15.11 per cent from the
immediate previous month of May (US$3.11 billion) and
23. Bangladesh’s Economy During FY21
21
also rose year-on-year by 31.62 per cent from US$2.72
billion, but below the strategic target (US$3.67 billion)
by 2.45 per cent.
The country’s major export products during FY21 that
showedpositivegrowth,year-on-year,includeagricultural
products (+19.27%), frozen & live fish (+4.65%), jute
& jute goods (+31.63%), knitwear (+21.94%), woven
garments (+3.24%), home textile (+49.17%), cotton
& cotton products (+15.52%), handicrafts (+65.55%),
specialized textiles (+12.81%), headgear/cap (+18.42%),
carpet (+58.73%), ceramic products (+11.23%), other
footwear (+24.30%), rubber (+30.59%), leather & leather
products (+18.06%), plastic products (+14.68%), chemical
products (+41.09%), engineering products (+80.60%),
man-made filaments & staple fibres (+10.05%),and other
manufactured products (+18.04%). However, negative
growth was showed in a number of products, such as,
paper & paper products (-8.38%), petroleum bi-products
(-0.64%) and cement, salt, stone, etc. (-20.57%).
24. Bangladesh’s Economy During FY21
22
Export earnings from top twelve countries except Japan
bounced back, year-on-year, in FY21 after facing a
setback for some time due to the COVID-19 pandemic
and registering positive growth now. Most of them,
however, registered a double digit growth. Earnings from
the major markets including United States, Germany,
Great Britain, Spain, France, Poland, Italy, India, the
Netherlands, Canada, and Denmark increased in FY21,
year-on-year, by 19.58 per cent, 16.77 per cent, 8.60 per
cent, 7.08 per cent, 15.14 per cent, 29.21 per cent, 2.03
per cent, 16.79 per cent, 16.20 per cent, 16.40 per cent,
and 32.62 per cent, respectively, while that from Japan
decreased year-on-year by 1.42 per cent in FY21.
To promote in the post-COVID era and to enhance
their exports after Bangladesh graduates from least
developed country (LDC) to lower middle income
status, the government has selected 17 products. The
products are selected from a list of items, provided by
the Commercial Counsellors of Bangladesh from twenty
countries, where export of these goods can be enhanced
significantly, if required policy supports are given. The
counsellors sent lists of several dozens of products, from
which the Ministry of Commerce (MoC) has primarily
picked 17 items for promotion. The products include:
antibiotic, electronics, furniture, ceramics, leather goods,
footwear, frozen fish and crustaceans, woven fabrics
of jute and jute yarn, sacks and bags and jute articles,
25. Bangladesh’s Economy During FY21
23
pharmaceuticals, plastic goods, toys, bi-cycle and
motorcycle, fruits and vegetables, paper and cardboard,
and Information Technology (IT) and IT-enabled services.
Now the MoC are working on to identify the barriers that
the products face in those twenty countries as well as
find ways to remove the obstacles. Efforts need to be
given to enhance export by providing as much policy
supports as needed and removing all obstacles. Specific
action plan will be taken to promote the products in the
countries where they have immense potentials to be
exported in increased volume.
Soon after the pandemic unfolded, the government on
25 March 2020 announced Tk.50.0 billion in stimulus
loans for exporters. Accordingly, the BB was set to
release the funds as salaries for workers and employees
of export-oriented factories through equal installments
in the three months from April to June. However, the
readymade garment sector has availed the entire Tk.50.0
billion allocation for it at 2.0 per cent service charge and
disbursed to 1,992 export-oriented business enterprises
through 47 commercial banks. In addition, it received
further Tk.55.0 billion from the Tk.400.0 billion fund
meant for large industries.
Besides, the BB has raised the export development fund
(EDF) to US$5.5 billion from US$3.5 billion in line with
the government’s efforts to tackle the economic fallout
from the COVID-19 crisis. Exporters can borrow more
26. Bangladesh’s Economy During FY21
24
money from the EDF at a lower interest rate. Previously,
the lending rate was set in accordance with the LIBOR
(London Interbank Offered Rate) plus 1.5 percentage
points, which equals around 4.0 per cent. Now the LIBOR
won’t have any bearing on loans from the EDF. The
interest rate thus fixed at 2.0 per cent only. Borrowers
pay 1.0 per cent to the BB and 1.0 per cent to the banks
distributing the loans. This instruction has effected
already from 1 April 2020. As on 30 June 2021, whole
amount have been disbursed through 56 banks.
Imports
Import payments (C&F) during FY21 remarkably
increased by US$10,810 million or 19.73 per cent and
stood at US$65,594.70 million against US$54,784.70
million during FY20. Custom based import in June of
FY21 increased by 44.95 per cent and stood at US$6,969
million compared to the same month of the previous
fiscal year (US$4,807.90).
Import Payments (C&F)
FY21 FY20
US$65,594.70
million
US$54,784.70
million
27. Bangladesh’s Economy During FY21
25
According to the BB data,the settlement of import Letters
of Credit (LCs) increased by 7.52 per cent to US$57,256.40
million during FY21 compared to US$53,253.71 million
in the previous fiscal year. This increase was driven by
consumer goods (+18.73%), machinery for miscellaneous
industries (+11.25%), industrial raw material (+11.01%)
and intermediate goods (3.91%). On the other hand, the
opening of fresh import LCs also increased by 19.50 per
cent to US$67,037.42 million in FY21 from US$56,099.89
million in the previous fiscal year. This increase
was mainly due to rise in opening of import LCs of
consumer goods (+25.19%), machinery for miscellaneous
industries (+22.43%), industrial raw material (+21.13%),
intermediate goods (+20.59%) and capital machinery
(+15.50%).
Remittances
The inflow of remittances in FY21 grew by 36.11 per cent
to US$24.78 billion from US$18.21 billion in the previous
28. Bangladesh’s Economy During FY21
26
fiscal year (FY20), thanks to the expatriate Bangladeshis
for sending moneyamid the ongoing COVID-19 pandemic.
The growth was mainly due to various policy initiatives
and financial support undertaken by the government
specially by allowing two per cent cash incentive for
sending inward remittance through the official channel.
Inflow of Remittances
US$24.78
billion
FY21 FY20
US$18.21
billion
In the last month of the year (June 2021), year-on-
year, remittances registered a growth of 5.89 per cent
to US$1.94 billion from US$1.83 billion. According to
experts, the government’s incentive along with the
competitive attitude of some banks has helped achieve
the higher growth of inward remittances in FY21. The
government’s incentive is encouraging the non-resident
Bangladeshis (NBRs) to send their hard-earned money
using banking channel instead of illegal ‘hundi’ system.
Pro-active attitude along with technology-based service
of some banks has helped achieve the higher growth
of inward remittances. Currently, 29 exchange houses
are operating across the globe, setting up more than
29. Bangladesh’s Economy During FY21
27
1,348 drawing arrangements abroad, to expedite the
remittance inflow.
Balance of Payments
The country’s trade deficit widened by 27.67 per cent to
US$22.80 billion in FY21 from US$17.86 billion in the
previous fiscal year because of rising import payments
amid the economic slowdown. In these two periods,
exports increased by 15.38 per cent while imports also
increased comparatively higher rate of 19.71 per cent.
BB’s recent data showed that export earnings recorded
a growth of 15.38 per cent to US$37.88 billion in FY21
from US$32.83 billion in FY20.Also import payment rose
comparatively higher rate of 19.71 per cent to US$60.68
billion in FY21 from US$50.69 billion in FY20.
Meanwhile, the country’s current account deficit
improved slightly in FY21 following higher growth
of inward remittances despite the ongoing COVID-19
30. Bangladesh’s Economy During FY21
28
pandemic that left many furloughed on the labor market.
The current account deficit came down to US$3.81
billion in FY21 from US$4.72 billion in FY20. The flow of
inward remittances grew by 36.11 per cent to US$24.78
billion in FY21 from US$18.21 billion a year ago despite
the ongoing global pandemic.
However, the financial account’s surplus grew by 67.50
per cent to US$13.08 billion during July-June of FY21
from US$7.81 billion in the same period of FY20. Higher
inflow of net foreign direct investment (FDI) along with
net other investments helped achieve higher growth
of the financial account surplus. The amount of net FDI
rose by 39.34 per cent to US$1.77 billion in FY21 from
US$1.27 billion in the previous fiscal year.
Balance of Payments
FY21 FY20
US$3.17
billon
US$9.27
billion
As a result, overall balance of payments (BoP) rose to
US$9.27 billion in FY21 from US$3.17 billion in the
previous fiscal, BB data showed.
31. Bangladesh’s Economy During FY21
29
Foreign Aid
According to the Economic Relations Division (ERD)
provisional data, the disbursement of foreign aid
decreased by US$0.16 billion or 2.20 per cent to
US$7.11 billion in FY21 compared to US$7.27 billion
in the previous fiscal year (FY20) despite hurdles in
execution of the foreign-funded projects amid the
COVID-19 pandemic. The inflow of foreign aid again
placed Bangladesh into the seven-billion-dollar club for
the second consecutive year. According to the experts,
the foreign aid was boosted by some large loans from
the ADB’s US$500 million for COVID-19 preparedness,
the WB’s US$1.0 billion for vaccine procurement and
job creation, and Japan’s US$320 million for budgetary
support. Out of US$7.11 billion, US$6.77 billion came as
concessional loans while US$0.34 billion came as grants.
Earlier, the government had set a target to receive an
US$8.32 billion worth of foreign aid in FY21.
32. Bangladesh’s Economy During FY21
30
On the other hand, development partners’ commitments
of foreign aid also decreased by 2.09 per cent to US$9.35
billion in FY21 from US$9.55 billion in FY20. Out of
US$9.35 billion, the development partners confirmed
US$8.67 billion as loan and US$0.68 billion as grant.
Meanwhile, the government made payments worth
US$1.91 billion funds during July-June period of FY21,
against the total outstanding MLT loans. Out of the
US$1.91 billion debt servicing, the government repaid
interest worth US$0.50 billion and principal worth
US$1.41 billion.The debt servicing in FY20 was US$1.72
billion.
Disbursement and Commitments of Foreign Aid
Commitments
US$7.11
billion
US$7.27
billion
FY21 FY20
US$9.35
billion
US$9.55
billion
FY21 FY20
Disbursement
Bangladesh takes Official Development Assistance (ODA)
mainly from multilateral organizations or countries
that provide soft loans or grants. The country’s largest
development partner is the World Bank (WB). Other
development partners include the Asian Development
Bank (ADB), Japan, the Islamic Development Bank (IDB),
China, the United Nations (UN), the UK’s DFID, Russia,
Germany, and India.
33. Bangladesh’s Economy During FY21
31
Foreign Direct Investment (FDI)
The net foreign direct investment (FDI) in FY21 increased
by 39.37 per cent to US$1.77 billion from US$1.27
billion in the previous fiscal year (FY20), according to
the BB’s balance of payments data. On the other hand,
the gross inflow of FDI during the period under review
also increased by 8.36 per cent to US$3.50 billion from
US$3.23 billion in FY20. FDI inflow in Bangladesh is low
compared to that in many countries at similar level of
development.
Bangladesh’s low labor costs are generally believed
to be attractive to foreign investors, yet they hesitate
to make fresh investments in the country because of
the country’s underdeveloped infrastructure, and such
other impediments as lack of adequate energy and
weak transmission infrastructure, lack of consistency in
34. Bangladesh’s Economy During FY21
32
policy and regulatory frameworks, scarcity of industrial
land, corruption, and non-transparent and uneven
application of rules and regulations. The government
needs to address these impediments to attract more FDI
to the country in order to ensure the country’s economic
recovery from the ongoing coronavirus pandemic.
Foreign Exchange Reserve
Amidst the ongoing COVID-19 crisis, Bangladesh Bank’s
gross foreign exchange reserves stood at US$46.39
billion (with ACU liability of US$1.55 billion) as of end
June 2021, compared to US$36.04 billion (with ACU
liability of US$625.56 million) as of end June 2020.
Considering the average of the previous 12 months’
import bills, Bangladesh Bank has estimated that the
current foreign exchange reserve (less ACU liability) is
sufficient to payimport bills for 8.20 months.According to
Experts, the reserve would support the foreign investors
to gain confidence while considering Bangladesh as an
investment destination.
Foreign Exchange Reserve
End June 2021
US$46.39
billion
End June 2020
US$36.04
billion
35. Bangladesh’s Economy During FY21
33
Price Situation
The general point to point inflation rate increased by
0.38 percentage points to 5.64 per cent in June 2021
from 5.26 per cent in the immediate past month (May
2021) mainly due to prices of some essential items went
up mainly in the rural areas. According to experts, the
impact of COVID-19 on the supply chain was one of the
key factors for higher inflationary pressure during the
period. A year ago, in June 2020, the inflation rate was
higher at 6.02 per cent.
Both food and non-food inflation rates increased in
June 2021 compared to the previous month (May). Food
inflation increased by 0.58 percentage points to 5.45 per
cent in June 2021 from 4.87 per cent in May 2021. Year-
on-year, food inflation was higher at 6.54 per cent.
On the other hand, non-food price inflation increased
by 0.08 percentage points to 5.94 per cent in June 2021
36. Bangladesh’s Economy During FY21
34
from 5.86 per cent in the previous month. Year-on-year,
non-food price inflation, however, was lower at 5.22 per
cent.
A comparison of point to point inflation data for rural and
urban areas in June of FY21 shows that the general and
food price inflation rate was higher in rural areas than in
urban areas while non-food inflation rate was lower in
rural areas than in urban areas.
Besides, the general point to point average inflation rate
decreased by 0.09 percentage points to 5.56 per cent
in FY21 from 5.65 per cent in FY20. The rate in FY21,
however, increased by 0.16 percentage points from
the government’s target of 5.4 per cent. For FY22, the
government has set a target to keep inflation rate within
5.3 per cent.
Average Annual Inflation
FY 20
FY 21
5.56% 5.65%
37. Bangladesh’s Economy During FY21
35
Food inflation rate increased but non-food inflation rate
decreased in FY21 compared to the previous fiscal year.
Food price inflation rate increased by 0.17 percentage
points to 5.73 per cent from 5.56 per cent and non-food
inflation rate decreased by 0.56 percentage points to
5.29 per cent from 5.85 per cent.
Public Finance
The tax revenue collection by the National Board of
Revenue (NBR) grew by 19.69 per cent in FY21 despite
economic slowdown due to the COVID-19 pandemic.
The NBR collected Tk.2,614 billion in FY21 compared
to Tk.2,184 billion in the previous fiscal year. However,
the revenue collection lagged behind by Tk.396 billion
or 13.16 per cent against the revised target of Tk.3,010
billion set for FY21 and the original target (Tk.3,300
billion) by Tk.686 billion during FY21.
NBR Tax Revenue Collection
In FY21
Tk 2,614
billion
In FY20
Tk 2,184
billion
During FY21, all three wings of the NBR achieved
moderate growth. In FY21, the customs wing posted the
38. Bangladesh’s Economy During FY21
36
highest growth of 27.41 per cent and stood at Tk.771.50
billion from Tk.605.52 billion in the previous fiscal year.
During the same two periods,value added tax (VAT) grew
by 14.91 per cent to Tk.975.07 billion from Tk.848.53
billion. Income tax, however, stood at Tk.867.20 billion
in FY21, grew by 18.79 per cent from Tk.730.04 billion in
FY20, according to the provisional data of NBR.
However, all of the three wings missed their respective
revised target for FY21, but achieved impressive growth
over the corresponding period of previous fiscal year.
In FY21, VAT collection target was Tk.1,086.00 billion,
followed by income tax Tk.1,066.79 billion and customs
duty Tk.857.21 billion.
Public Expenditure
During the ongoing COVID-19 situation, the
implementation rate of the Annual Development
Programme (ADP) was comparatively better in FY21
compared to that of the previous fiscal year.According to
the Implementation Monitoring and Evaluation Division
(IMED) recent data, 58 ministries and divisions could
spend Tk.1,720.50 billion or 82.21 per cent of the revised
allocation of Tk.2,092.72 billion in FY21 compared
to 80.39 per cent or Tk.1,617.41 billion in the revised
outlays of Tk.2,011.99 billion in FY20.
Out of the spending in FY21, the foreign aid (project
aid) spending was Tk.524.21 billion, which was 83.21
39. Bangladesh’s Economy During FY21
37
per cent of the total foreign aid (Tk.630.00 billion). On
the other hand, spending of local funds (including GoB
funds) in FY21 was Tk.1,196.29 billion, which was 81.79
per cent of the total local funds of Tk.1,462.72 billion.
Implementation of the ADP emerged as a big challenge
after the spread of COVID-19 in the country since March
2020.
Fifteen ministries and divisions, which together received
84.63 per cent of the total development budget in FY21,
were implementing some mega projects, including the
Padma Bridge and metro rail projects, as well as some
large power plants.Among these ministries and divisions,
project implementation by the Ministry of Science and
Technology (101.29%) was the highest, followed by
the Power Division (89.71%), the Road Transport and
Highways Division (87.98%), the Ministry of Railways
(84.97%), the Ministry of Civil Aviation and Tourism
(84.92%), the Bridges Division (83.76%), the Secondary
and Higher Education Division (83.68%), the Ministry
40. Bangladesh’s Economy During FY21
38
of Primary and Mass Education (81.82%), the Local
Government Division (81.44%), and the Ministry of Water
Resources (80.89%). Implementation agencies that spent
less than 80 per cent of their respective ADP budgets
were: the Ministry of Shipping (79.03%), the Ministry of
Industries (78.57%), the Ministry of Housing and Public
Works (72.36%), the Prime Minister’s Office (71.33%), and
the Health Services Division (57.91%).
The Health Services Division, 5th largest budget holder,
could spend only 57.91 per cent of the ADP allocation in
FY21, which was the worst among top 15 recipients of
the development budget. Although the government had
given highest priority to health projects due to COVID-19
pandemic, the Ministry was the worst performer. The
Heath Services Division utilized only Tk.69.37 billion,
57.91 per cent of its Tk.119.79 billion ADP outlay for
FY21. In the previous fiscal year (FY20), the Health
Services Division had also performed poorly as it utilized
only 74 per cent of its total outlay.
Employment Situation
The country’s overseas employment sector is now facing
a blow due to the COVID-19 pandemic. However, more
than two lakh workers went abroad with jobs in FY21
after the employing countries withdrew travel ban on
migrant workers from Bangladesh. In the early 2020,
many countries postponed the recruitment of migrant
41. Bangladesh’s Economy During FY21
39
workers due to the fallout of COVID-19 pandemic,
which created an uncertainty over sending workers from
Bangladesh. Later, things however started getting almost
normal as statistics available at the Bureau of Manpower
Employment and Training (BMET) shows that 2,31,691
Bangladeshis went in different destinations in between
01 July 2020 and 31 May 2021. Some 13,312,192
Bangladeshis have gone abroad with jobs since 1976.
Most of them went to the Middle Eastern countries.
Recently the government has taken a Tk.4.27 billion
project to rehabilitate the expatriate workers who
returned home after the coronavirus shocks at different
employing countries. Under the project, the government
will rehabilitate 0.2 million returnee migrant workers as
some 0.5 million have already come back home, losing
overseas jobs due to the COVID-19 pandemic. With the
42. Bangladesh’s Economy During FY21
40
financial support of the World Bank, the Wage Earners
Welfare Board (WEWB) will implement the project and
also prepare a database of the migrant workers in order
to facilitate possible assistance in the future. The WEWB
will train returnee migrant workers, manage certificates
from accredited institutions for 23,500 skilled returnees,
connect them with different technical and financial
institutions at home and provide some financial support.
Budget for FY2021-22 (FY22)
The outlay of the FY22 national budget is Tk.6,036.81
billion, which is 12.00 per cent higher than that of the
last year’s revised budget (Tk.5,389.83 billion). Within
the national budget there is a Tk.2,370.78 billion
development budget,which is 13.97 per cent bigger than
that in the revised FY21 budget (Tk.2,080.25 billion), and
a non-development budget of Tk.3,288.40 billion, which
is 8.69 per cent bigger than in the revised FY21 budget
(Tk.3,025.47 billion).
The budget sets a 7.2 per cent GDP growth target and
commits to bring down the inflation rate to 5.3 per cent
by the end of FY22.
The budget targets a 10.66 per cent revenue growth to
Tk.3,890.00 billion over the revised revenue estimate of
Tk.3,515.32 billion in the outgoing fiscal. The revenue
receipts will comprise of Tk.3,460.00 billion as tax
revenue and Tk.430.00 billion as non-tax revenue. In the
43. Bangladesh’s Economy During FY21
41
total tax revenue,Tk.3,300.00 billion will come from NBR
and Tk.160.00 billion from non-NBR taxes.
The size of the ADP (Tk.2,253.24 billion) in the FY22
budget is 14.01 per cent larger than the past year’s
revised ADP (Tk.1,976.43 billion).
In the ADP allocations, the human resources sector
(education, health, and other related sectors) has been
given the highest priority. Some 29.4 per cent of ADP
allocation has gone to that sector. Communication
infrastructure (road, railway, bridges, and other related
sectors) comes next, receiving 26.4 per cent of the
allocation,followed by some 21.7 per cent for agriculture
and rural development (agriculture, local government,
rural development, water resources and other related
sectors), 12.1 per cent for energy infrastructure (power,
energy and mineral resources), and 10.4 per cent for
other sectors.
44. Bangladesh’s Economy During FY21
42
MAJOR ECONOMIC INDICATORS
Cont’d...
Indicators FY17 FY18 FY19 FY20 FY21(P)
National Accounts
GDP (million US$) 249,742 274,114 302,568 323,111 355,037
GNI (million US$) 260,418 286,615 316,089 338,904 377,056
GDP Growth (%) 7.28 7.86 8.15 3.51 5.47
Population (million
number)
161.75 163.65 165.55 167.43 169.31
Per Capita GDP (US$) 1,544 1,675 1,828 1,930 2,097
Per Capita GNI (US$) 1,610 1,751 1,909 2,024 2,227
GDP by Sector
Agriculture
Share in GDP (%) 14.74 14.23 13.65 13.74 13.47
Growth Rate (%) 2.97 4.19 3.92 4.59 3.45
Industry
Share in GDP (%) 32.42 33.66 35.00 34.78 34.99
Growth Rate (%) 10.22 12.06 12.67 3.25 6.12
Manufacturing
Share in GDP (%) 21.74 22.85 24.08 23.59 23.66
Growth Rate (%) 10.97 13.40 14.20 1.80 5.77
Construction
Share in GDP (%) 7.36 7.50 7.63 7.98 8.22
Growth rate (%) 8.77 9.92 10.25 8.66 8.68
Electricity, Gas & Water Supply
Share in GDP (%) 1.52 1.54 1.55 1.52 1.51
Growth Rate (%) 8.46 9.19 9.58 1.69 4.74
Service
Share in GDP (%) 52.84 52.11 51.35 51.48 51.54
Growth Rate (%) 6.69 6.39 6.78 4.16 5.61
Wholesale and Retail Trade, Repair of Motor Vehicles
Share in GDP (%) 14.01 13.95 13.92 13.94 14.08
Growth Rate (%) 7.37 7.45 8.14 4.03 6.54
Hotel and Restaurants
Share in GDP (%) 0.75 0.75 0.74 0.72 0.73
Growth Rate (%) 7.13 7.28 7.57 1.75 6.85
45. Bangladesh’s Economy During FY21
43
Indicators FY17 FY18 FY19 FY20 FY21(P)
Transport, Storage & Communication
Share in GDP (%) 11.26 11.13 11.01 10.98 11.04
Growth Rate (%) 6.76 6.58 7.19 3.67 6.07
Financial Intermediations
Share in GDP (%) 3.45 3.45 3.42 3.40 3.36
Growth Rate (%) 9.12 7.90 7.38 3.09 4.31
Real-estate, Renting & Business Activities
Share in GDP (%) 6.49 6.31 6.13 6.18 6.15
Growth Rate (%) 4.80 4.98 5.23 4.83 4.90
Public Administration and Defence
Share in GDP (%) 3.70 3.71 3.65 3.70 3.73
Growth Rate (%) 9.15 8.47 6.40 5.44 6.16
Health and Social Works
Share in GDP (%) 1.85 1.83 1.89 2.00 2.09
Growth Rate (%) 7.63 7.02 11.79 9.97 9.94
Education
Share in GDP (%) 2.48 2.46 2.44 2.47 2.47
Growth Rate (%) 11.35 7.01 7.66 5.06 5.56
Community, Social and Personal Services
Share in GDP (%) 8.87 8.52 8.15 8.08 7.90
Growth Rate (%) 3.62 3.65 3.72 3.01 3.05
Money and Credit (billion Tk.)
Narrow Money (M1) 2,400.79 2,548.94 2,732.93 3,282.64 3,756.16
Percentage Change (%) (13.02) (6.17) (7.22) (20.11) (14.42)
Broad Money (M2) 10,160.76 11,099.81 12,196.12 13,737.35 15,605.18
Percentage Change (%) (10.88) (9.24) (9.88) (12.64) (13.60)
Foreign Assets (net) 2,666.97 2,646.74 2,724.00 2,973.36 3,821.79
Percentage Change (%) (14.40) (-0.76) (2.92) (9.15) (28.53)
Domestic Assets (net) 7,493.79 8,453.07 9,472.12 10,763.99 11,783.38
Percentage Change (%) (9.68) (12.80) (12.06) (13.64) (9.47)
Domestic Credit 8,906.70 10,216.27 11,468.85 13,076.34 14,390.93
Percentage Change (%) (11.16) (14.70) (12.26) (14.02) (10.05)
Govt. Sector Credit (net) 973.34 948.95 1,132.73 1,811.51 2,202.20
Percentage Change (%) (-14.78) (-2.51) (19.37) (59.92) (21.57)
Cont’d...
