Home ›› 21 Jan 2023 ›› Opinion
The world diplomacy media heavyweight "Foreign Policy," in its last year end roundup on South Asia had noted that the year 2023 is potentially a big year for India while the outlook is uncertain for other economies in the region. And less than a couple of weeks after the US based powerful media outlet had made such a forecast, the World Bank came out with annual forecast and it noted there that the Indian economy will shine brightest in the region this year.
In the first week of the current year, the World Bank released its first forecast on the world economy for the current year. The report focused on the economies of South Asia, significantly touching on the economy's present and future of all countries of the region. Noticeably in the WB assessment report, India has ousted Bangladesh from the top of the list as the growth maker at the highest rate as it had been performing in the past few years.
The WB report showed that India would make 6.9 per cent growth in 2022-23 while Bangladesh will only have a growth of 5.2 per cent.
So what is going to happen? Is the current year going to be a tremendous economic year for India? What will be the fate of Bangladesh, whose economy was the fastest growing economy in South Asia and had been referred to as a role model of the fastest growing economy among the Least Developed Countries or developing countries across the world?
India is a big country with the third largest population in the world now. With China's population growth coming to a halt or seeing negative growth last year, India is also set to be the most populous country in the world very soon. India is a mighty country, and its economy should be robust. So in terms of the scale, comparing the economy of Bangladesh with India's is not wise. However, in terms of growth rates, vibrancy and socio-economic empowerment in diverse aspects, Bangladesh is referred to by even Indian development thinkers as an economic role model.
So the vital point here for attention is that if Bangladesh finally continues staying backwards in the growth rate, her achievements will go out of the global community's attention.
Not only has World Bank estimated that India, the 5th largest economy in the world, will see higher growth compared to the previous year. Many other global surveys indicate that internal and external growth factors are currently favouring India. A report from World Economic Forum conducted a survey involving leading economists across the world. The survey was released on the January 16 this year. It found that Bangladesh also in a favourable position like India. The survey report showed India and Bangladesh might offset the impacts of the ongoing and upcoming recessions in the global economy because their foreign trade and economy will continue being benefitted as Western countries continue reducing dependency on China. Another survey among global CEOs reveals that India and Vietnam are at the top of the list of choices of Western and Japanese companies that are relocating their operations from China gradually.
Bangladesh's economy had been doing very well until the middle of the year. But the second half of the year became embroiled in turmoil with the country's foreign exchange reserve squeezed fast, and its currency Taka depreciated abruptly. Such conditions pushed inflation further, and it touched as high as nine per cent, a record in recent decades. A latest global survey on food inflation showed that the food price inflation rate in India is one of the lowest in the world, and Bangladesh is still struggling in this regard.
Hopes are still there because, since December of the last year, growth in export and remittance earnings showed signals of things coming back on track again in Bangladesh. So policymakers here should first diagnose the economy's current state and thoroughly discuss why India is in a favourable position, especially with external aspects of the economy. Another vital aspect is that despite India yet to go against Russia, the Western economic biggies are now more vital friends of India. With the guardianship of the United States, Westerners are now somewhat desperate to strengthen trade and investment relations with India. Maybe anti-China sentiment or strategy is working here mainly.
As a whole, India is in a better position now as her internal political situation looks relatively stable, at least for the time being. On the other hand, in the last quarter of the previous year, Bangladesh experienced political heat at regular intervals, side by side with economic turmoil. Whether we agree or not, political stability will determine how Bangladesh, India or other South Asian countries will perform economically in the current year and the next. Here one comment of a Pakistani columnist can also be referred to. Such a comment indicates that the Pakistanis have also recognised India's political performance.
In an article published in early January, the Pakistani columnist in Daily Pak Tribune noted, "Whole of South Asia, except India, underperformed in 2022 in the areas of economy and political harmony." This is not a mere comment of that Pakistani columnist. This is very significant because political stability is the inevitable precondition for ensuring the mobility of the economy and sustainability of the growth of the economy.
In FY 2020-21, when the pandemic almost paralysed the world economy, including that of South Asia, Bangladesh showed the highest scale of resilience, keeping her economy active everywhere. The country in that period kept the floors of factories vibrant, and the farmers of this country kept paddy fields yielding much. Farmers here produce nearly 95 per cent of the rice supply, the staple food of this nation. So, the country has food security, at least in staple food.
The Western rating agencies and prominent news media also portrayed Bangladesh as a test case of a pandemic-resilient economy for the world. So such a country can be a case study of failure or decelerated growth rates again. To keep political stability, it needs to ensure economic stability, and for economic stability it needs to keep up political stability.
The writer is a journalist writing on diverse economic issues. She can be contacted at [email protected]
