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Bangladesh keeps outrunning India in per capita GDP race

Maira La

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Bangladesh is forecast to remain ahead of India in terms of per capita gross domestic product (GDP) in the next five years to 2026 powered by buoyancy in remittance, exports and agricultural activities.

With $355 billion, Bangladesh, the second-biggest economy in South Asia, first overtook India in 2020 in terms of per capita GDP, a measure of the economic prosperity of a nation, thanks to its more than 6 per cent annual economic expansion for the last 15 years.


Bangladesh managed to grow even during the pandemic when most of the economies contracted.

India, one of the main economic powerhouses in Asia, saw its economic output decline to $2,660 billion in 2020 as it suffered a severe setback from the crisis. As such, its per capita GDP declined to $1,929 from $2,098 in 2019, according to the World Economic Outlook database of the International Monetary Fund (IMF).


Last year, the IMF projected that per capita GDP for India was likely to grow to $2,030 in 2021, and Bangladesh's per capita GDP would grow by 5.4 per cent to $1,990. This meant that the country's achievement would be short-lived.

But on Tuesday, the lender forecast that Bangladesh's per capita GDP would accelerate to $2,138 this year, and India's to $2,116. And Bangladesh will continue outrunning India for the next five years as well.

The IMF said India's economy rebounded by 9 per cent in 2021. Yet, the growth is not going to enable India to surpass its close neighbour in terms of per capita economic output.


Driven by steady economic growth, Bangladesh is forecast to have an 8 per cent higher per capita GDP at $3,253 in 2026 than India's $3,018.

Bangladesh's GDP will stand at $565 billion five years later. India's size will be $4,393 billion.

"The good news is Bangladesh is catching up on the per capita income metric," said Zahid Hussain, a former lead economist at the World Bank's Dhaka office.

"This is true generally in relation to the rest of the world and our biggest neighbour, India. It goes to show the dynamism of Bangladesh's economy in normal times and resilience in crisis."

He, however, says people need to be more guarded in reaching conclusions on whether Bangladesh has become richer than India in terms of income per capita.

"The answer is yes if you compare GDP per capita in current US dollars as reported in the IMF's report."

"The conclusion will be very different when you compare nominal GDP per capita in US dollars adjusted for differences in purchasing power of national currencies."

Purchasing Power Parity (PPP)-based GDP is calculated by dividing nominal GDP by the PPP exchange rate. The latter reflects the purchasing power of the national currency relative to that of the US dollar in the US.

Bangladesh's PPP exchange rate is Tk 33 per USD in 2021 compared to India's 22 rupees. This means it takes Tk 33 to buy in Bangladesh what one American greenback can fetch in the US.

The same basket costs 22 rupees in India. Thus, the purchasing power of the Indian currency is 33 per cent higher than the purchasing power of the taka.

Citing IMF's report, Hussain said based on the PPP exchange rates, per capita GDP in India in 2021 is $7,319, which is 27 per cent higher than Bangladesh's $5,733.

India's per capita GDP in PPP dollars is projected to rise to $10,866 and Bangladesh's to $ 8,859 by 2026.

On average, Indian per capita income would still be 22.6 per cent higher than Bangladesh, but the difference is projected to shrink, Hussain said.

"So, the general conclusion that Bangladesh is catching up still holds."

"But whether Bangladesh has exceeded and will continue to exceed India in terms of per capita GDP depends critically on whether we adjust the nominal GDP per capita in USD for differences in the purchasing power of national currencies in Bangladesh and India."

Zaid Bakht, a former research director of the Bangladesh Institute of Development Studies, said Bangladesh's economy grew as its real sectors such as agriculture, remittance, and export performed well despite the pandemic.

On the other hand, the population growth remains low, resulting in an increased per capita GDP.

"There will be a significant effect on the economy when mega public infrastructure projects become operational within the next five-six years," said Bakht.

BIDS Director-General Binayak Sen said per capita consumption had been low in India since 2012, and its economic growth declined to 2.5 per cent before the pandemic struck, owing to demonetisation and political instability.

After Covid-19 emerged, the Indian economy suffered recessions, whereas people in Bangladesh were able to resume economic activities after the two-month's shutdown.

"And the extent of injury to the economy was not that much as was feared. So, the IMF's projection appears to be realistic."

--
Source: The Daily Star
 

SMX 3.0

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Lol, it's just that IMF hasn't adjusted for inflation for data for India in it's WEO report this time. Check the last WEO report if you are in doubt.

Growth rates for India & Bangladesh for 2021 & 2022 are:

India: 9.5% & 8.253%
Bangladesh 4.5% & 6.54%.

Guess how Bangladesh will have a per capita GDP of $ 2138 in 2021 & $2326 in 2022 from $1961 in 2020?

Real GDP growth rate for BD for 2021: 4.5% + 5.58% inflation
For 2022: 6.54+ 5.684 inflation.
 

Bilal9

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Just slightly ahead of the giant slum. Nothing to be proud of, yet.

Well the fact is that we are moving ahead, not sliding back. That is the important part.

Comparing with India is the last thing on my mind.

The next two years will be (ahem) interesting to say the least.

Almost all the much-ballyhooed infra projects will be completed by EOY 2023 or EOY 2024 at the latest.

We will see whether the trumpeted benefits will actually materialize after all the larger govt. and country-specific SEZ's are completed and export starts in earnest. Most of the larger IT parks will also be built by then.

Matarbari and Rooppur power projects will come on line, the Metros, Airport and Freeways will be operational in Dhaka and the tunnels and large bridges all over the country will be ready to go, along with the new seaports.

We shall see what happens....
 
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Maira La

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Lol, it's just that IMF hasn't adjusted for inflation for data for India in it's WEO report this time. Check the last WEO report if you are in doubt.

Not adjusted for inflation "THIS TIME"? :lol: :lol:

The figures reported are nominal GDP, and by definition it's not adjusted for inflation.

You don't sound too bright. What's your caste?
 

SMX 3.0

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Not adjusted for inflation "THIS TIME"? :lol: :lol:

The figures reported are nominal GDP, and by definition it's not adjusted for inflation.

You don't sound too bright. What's your caste?

Nominal GDP & GDP per capita of Bangladesh in 2021 are $355 billion & $2138 respectively?

From $323 billion & $1961 respectively in 2020?

With a 4.5% growth rate this year? :rofl:

It's real GDP, dumbass. Your nominal GDP per capita would be far less than India growing at 9.5%.
 

MH.Yang

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Not really, but we are planning to add Bat soup trade to the GDP.



It's already proven, Mullah. STFU if you still can't comprehend it.

It is a lie that Chinese people eat bats, and bat soup is the food of Southeast Asian people.

I heard that there are cannibals in India. Will you include the corpses in the list of imported goods?
 

UKBengali

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Good that BD finally surpassed that multi-ethnic mess India in GDP per capita but that is nothing to be proud of.

India is an unnatural entity that does well just by holding itself together. Anything else must be considered a bonus.
 

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