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-Macroeconomics Project

GEOGRAPHIC LOCATION and DEMOGRAPHICS


Located in South Asia between India and Myanmar
Large number of rivers- Ganges, Brahamputra and Meghna and its
tributaries flow through Bangladesh which can be used for Population Density(people per sq. km of land area)
GEOGRAPHIC

agricultural purposes

Bank
SOURCE: World
1400 soil
LOCATION

Due to its suitable geography it gets huge supply of alluvial


from these rivers making it a fertile land 1200
Floods are commonplace and strategies are built to cope with
1000 that
Bangladesh has a sub-tropical climate with hot-humid summers800 and
mild winters
600
Natural Resources- It has considerable amount of natural resources
with natural gas, limestone and timber being the dominant400 ones.
200soil
Due to its suitable geography it gets huge supply of alluvial
from rivers making it a fertile land 0
Bangladesh India Pakistan China USA
Bangladesh has a population of approximately 16.3 cr which forms
COUNTRY PROFILE

Religious Segmentation
2.19% of the total world population

DEMOGRAPHICS
Median age of Bangladesh is 26 years which indicates a young
population and hence abundant labour force
66% of the population lives in rural areas with agriculture and fishing 0% 1% 0% 9% Buddhist
as the dominant economic activities Christian
Dhaka and Chittagong are the two important urban centers, Dhaka
being home to conglomerates and textile and pharmaceutical Hindu
industries, Chittagong being a center for shipbuilding industry Muslim
90%
Bengali is the official language Other
Islam is the majority religion, Hinduism also forms a sizeable chunk
of population
SOURCE: UN
2% DATA Yearly
34%
Rural Bengalis Population:163827
Growth:1.19
66% Others 258
98% %
SOURCE: CENSUS
Population DATA
Ethnic Groups
Division
SOURCE: World SOURCE: CIA
GEOGRAPHIC LOCATION,DEMOGRAPHICS
Bangladesh came into existence after the 1971 Indo-Pak War.
STRUCTU
POLITICA

It has emerged from military rule to establish democracy which has


lead to strong political and social institutions
RE
L

However, the political situation remains volatile which can be seen


from 2015 political crisis between two of its main political parties

STRUCTURE
The basis of social stratifications is mostly economic with lineage and

SOCIAL
background taking a back seat
Culture-Bangladeshs culture is shaped by its East Bengal heritage ,
festivals are celebrated with a lot of vigor
COUNTRY PROFILE

Fish is an important part of their cuisine and also the base of their
diet

Major sectors in the economy are agriculture, manufacturing,

ECONOMIC PROFILE
apparel and shipbuilding
Dhaka Stock Exchange is the biggest stock exchange in Bangladesh
with market capitalization of $320 billion. It was one of the better
performing index during the Great recession of 2008 due to its low
correlation with developed country markets
Banking sector in Bangladesh is governed by its central bank-
Bangladesh Bank . It is divided into scheduled and non-scheduled
banks with a total of 55 banks
Grameen Bank is a specialized micro-credit institution aimed at
poverty alleviation and women empowerment in Bangladesh which
also received the Nobel Prize
INFLATION , EXCHANGE RATE AND REMITTANCES
Comparison of GDP Growth & Inflation

Exchange Rate of 1$ to Taka


10.000% 85.000

SOURCE: World
8.000%
80.000
6.000%
GDP Growth (in
4.000% %) 75.000

Bank
2.000%
70.000
0.000% SOURCE: World 2011 2012 2013 2014 2015
2011 2012 2013 2014 2015Bank Database

Inflation in Bangladesh has been decreasing from 10.7% to 6.2% in

INFLATIO
MACROECONOMIC

the present scenario. This could be attributed to lower fuel prices


PERFORMANCE

and commodity prices

N
Due to reducing food prices food inflation has been decreasing but
non-food inflation has been increasing due to high salaries of
government employees

Bangladesh
REMITTA

SOURCE:
Remittances affect GDP indirectly by stimulating consumption

NCE
It also affects foreign exchange report which has an effect on
inflation through imports

Bangladesh Bank follows a managed float as it has been buying

EXHANG
E RATE
foreign currencies to prevent Taka from appreciating Remittances & Growth

15,500 0.14

Exchange rate is influenced by two factors in Bangladesh 15,000

14,500
0.12

0.1

0.08

Remittances of workers earning abroad


14,000
0.06
13,500
0.04
13,000
0.02

Export earnings dominated by garment and textile industries


12,500
0
12,000 -0.02

11,500 -0.04
2011 2012 2013 2014 2015
Private Tranfer(Worker
Remittance growth(in %)
Remittances)
GDP Growth and Estimates
YEARS 2011 2012 2013 2014 2015
The GDP of bangladesh has been constantly growing at a Nominal $ $ $ $ $
average rate of 6.5 %. However there was a fall in GDP growth in GDP 128.63 133.35 149.99 172.88 195.08
the year 2013 to about 6% after which there has been a rise Consumpt
again.The fall can be mainly attributed to the bearish private ion 75.05% 74.48% 73.71% 72.61% 73.12%
investment sentiment and modest consumption due to the
euro-crisis & fall in agricultural growth to 2.2% mainly caused Investme
by the falling rice prices. This was also caused due to the nt 18.31% 18.02% 17.77% 17.92% 17.69%
political instability in the country ahead of the National Governm
Elections causing consumers to adopt a more cautious approach ent
towards spending and investors to wait for a more suitable time to Spending 14.20% 15.28% 15.75% 16.01% 16.60%
proceed with their proposed investment spending. Net
Exports -7.56% -7.78% -7.23% -6.54% -7.41%
MACROECONOMIC

Exports 19.93% 20.16% 19.52% 18.98% 17.33%


GDP According to
PERFORMANCE

Source: World27.49%
Imports Bank 27.94% 26.75%
GDP(in 25.52%
billion US $) 24.74%
sectors AGRICULT
SERVICES
INDUSTR
Total
100.00 100.00 100.00 100.00 100.00
% 2016 % % % %
URE Y
(53.9%) Predictions
(17.2%) (28.9%)
According to nine months
IT Crop Garments & data of 2016 Bangladesh
GDP growth is
Educatio Forest Knitting
Factories estimated to touch
n 7.05% which will be the
Health ry
Fisherie Leather first time Bangladesh
breaches the figure of 7%.
Bank & s industry
Livesto Food and This would be due to
Insuran increased political
ck beverage stability and increased
ce
Defense & growth in industrial
INTEREST RATES,UNEMPLOYMENT and GOVERNMENT SPENDING
Interest rates
INTERES
T RATES
Interest rates have been on a declining trend since the last 5 years Interest Rates

SOURCE: ADB Bangladesh Country


mainly due to the option of lower rate financing from foreign
countries, hence pushing interest rates down. Call money market 16
rate is down at 3.71%
14

12
Government expenditure share in GDP is quite less as compared to

SPENDING
GOVERNM
other developing countries. This is also due to lower tax revenues as 10

ENT
a result of lower tax base. Also government keeps a buffer in order to 8
provide for sudden needs in sectors which get affected from
instability in country 6

Report
4
COUNTRY PROFILE
UNEMPLO


YMENT

Unemployment rate has been hovering around 4.5% registering a dip


in 2014 due to increasing private investment . But problem of labour
Deposit Rate
productivity still plagues agriculture sector

Bangladesh's Fiscal Expenditure, 2011-


20.00
2014 (% of GDP)
15.00 Pay Allowances

10.00 Other Expenses

5.00 Subsidies,transfers
and Net Lending
0.00
2011 2012 2013 2014 Capital Expenditure
SOURCE: IMF Article IV country report
GDP Growth and Estimates

Table of inflation differential and infographic


Current TWIN Capital Account
Account SURPLUS Surplus Due to the twin surpluses
Surplus there is a pressure on
taka to appreciate, to
prevent this appreciation
Positive Pressure on Taka to Positive Pressure on Taka to appreciate
appreciate still present for Pound, Euro, SGD etc.
from affecting export
competitiveness, central
bank buys US dollars to
Might lead to loss of export keep the rate inside a
competitiveness Inflation Differential with other
range pegged by dollar.
economies
This leads to huge
accumulation of reserves
Central bank buys US dollars which could lead to
Taka Appreciation + Greater
inflation in Bangladesh inflation
Also the upward pressure
MACROECONOMIC

on taka due to BOP


PERFORMANCE- I

Leads to accumulation of reserves


surplus is not neutralized
Leads to higher REAL exchange rate
appreciation for other currencies like
pound, euro, rupee . This
Increase in money supply
appreciation is
accentuated by the
Loss of
inflation differential with
export
these economies leads to
competitiven
a even greater real
ess
appreciation leading to a
loss in export
competitiveness in these
markets