Update February 16, 2015

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‘Bangladesh to be the 23rd largest economy in 2050’ projects PwC

FR Fateh

Economic growth

Economic growth projection of PricewaterhouseCooper ‘PwC’

 

16 Fabruary 2015, Nirapad News : In terms of purchasing power parity (PPP) Bangladesh will become the world’s 23rd largest economy by 2050, says the PricewaterhouseCoopers (PwC) in its latest report on global economy. The PwC projection showed that Bangladesh would outnumber developed countries like Australia and advanced developing countries like Malaysia within the next 35 years.

The report titled ‘The World in 2050’, revealed this month showed that Bangladesh’s gross domestic product (GDP) was $536 billion (53,600 crore) in 2014 in PPP terms. But the GDP size will be $1,291 billion in 2030 and increase further to $3,367 billion in 2050, according to the PwC projection.

PwC’s latest report is an updated version of the long-term economic growth projection of the multinational professional service network. The group, having headquarters in London, first published such a report in March 2006, which set out projections for potential growth in GDP in 17 leading economies over the period to 2050. Later these projections were updated in March 2008, January 2011 and January 2013, expanding the country coverage.

Bangladesh is included in the latest update along with Colombia, Egypt, Iran, the Netherlands, Pakistan, the Philippines and Thailand. Thus ‘World in 2050′ model now covers a total of 32 countries where Bangladesh is ranked 31st followed by Vietnam. These 32 countries currently account for around 84 per cent of global GDP, up from around 80 per cent for the 24 economies in PwC’s 2013 report.

China, which is already the largest economy in the world in terms of PPP, will continue to keep the top place in 2035 and 2050. India will replace the United States after 35 years and become the second largest economy followed by the USA. Indonesia will be fourth and Brazil will be fifth.

The PwC identified four key factors behind these 32 countries’ growth in next 35 years. These are: growing labour force of working age, increase in human capital, growth in physical capital and factor productivity. “Emerging economies have stronger potential growth than the current advanced economies on most of these measures,” said the PwC report.

PwC, however, makes a note of caution by saying that “the projections are of potential future GDP if such policies are followed, rather than predictions of what will actually happen.” “Not all of these countries may be able to sustain such policies in the long-run in practice,” it added.

Dr Zahid Hussain, lead economist at Dhaka office of the World Bank, however, termed the projection on Bangladesh ‘not a realistic’ one. “The underline assumption of Bangladesh being the world’s 23rd largest economy is continual GDP growth of over 7.0 per cent for the next three decades,” Dr Hussain told the FE. “Given the country’s development experience, it is very unlikely.” He was of the view that continuation of higher growth required strong institutional capacity and good governance. The country lacked in both these areas, he added. “The existing policies and institutions of the country are not growth friendly,” Dr Zahid explained. “The institutions are still extractive and yet to be inclusive, although the role of different stakeholders like Non-Government Organisations (NG0s) role has increased.”

The World Bank economist also pointed out current political turmoil as a major setback for the country’s faster growth. “Maybe we are now very much pre-occupied in the current political situation, but it can’t be ignored any way.” Dr Zahid, however, believed that different segments of the people like farmers, workers and entrepreneurs of the country already established their contribution to development and growth. “Thus, the potential of Bangladesh in 2050 is not very unrealistic,” he added. “It requires political governance to move ahead and reach even the level below the projection.”

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