Per capita income to rise by 40pc next FY, predicts finance ministry

Bangladesh’s per capita Gross National Income (GNI) is likely to jump more than 40 percent to $2,670 (nominal) next fiscal year from $1,906 of the outgoing fiscal, showed provisional official figures estimated by the macroeconomic wing of the finance ministry.

The GNI means all income of a country's residents and businesses including residents abroad while gross domestic product (GDP) takes into account domestic production only. The GNI per capita is highly associated with the quality of life of citizens.

According to the finance division of the ministry, the macroeconomic wing usually does such projection as it is one of the major criteria to obtain middle-income country status.

Asked how they can project such high per capita growth during Covid-19 outbreak, an official of finance division said the pandemic could not hit hard the country’s agriculture sector despite transportation disruption.

“We have low fiscal growth this time due to the pandemic, but next one will be above 8 percent,” he said.

The country continues to express its aspiration to join the middle-income group by 2021 -- the 50th anniversary of its independence, added the official.

Last April, the World Bank predicted that Bangladesh’s GDP growth would plunge to 2.0–3.0 percent in the 2019-20 fiscal year amid the declining garment exports, lower private investment growth and broader disruptions caused by the Covid-19 havoc.

But Finance Minister AHM Mustafa Kamal disagreed with the bank's forecast, saying the country’s GDP cannot crash-land since the economy was on a strong footing except for export growth during the first eight and a half months to March 15.

The global economy, no doubt, is in bad shape, but it does not mean Bangladesh's economy will crash to the level the WB projects, the minister added.

However, economist and finance adviser to a past caretaker government Dr AB Mirza Azizul Islam said the projection of per capital growth next fiscal during the pandemic is unrealistic.

Next fiscal, nominal GDP maybe 6 percent; but if you deduct inflation rate, growth rate may be even lower, he said, adding that the per capita income would definitely go down compared to the outgoing one.

If the government shows a rosy picture to the world, it might create hindrance to accessing foreign funds, warned Mirza Azizul Islam.

According to the World Bank, rapid growth enabled Bangladesh to reach the lower middle-income country status in 2015. In 2018, Bangladesh fulfilled all three eligibility criteria for graduation from the UN’s Least Developed Countries (LDC) list for the first time and is on track for graduation in 2024.

Prime Minister Sheikh Hasina last year said Bangladesh would soon become an upper middle income country, as the government has been implementing massive development projects in light of its “Vision 2021” and “Vision 2041”.

The premier also said Bangladesh’s per capita income would be $5500 by 2031 and $16000 in 2041 as the government pursues the “Vision 2041”.

The world’s Middle Income Countries (MICs) are a diverse group by size, population, and income level.

They are defined as lower middle-income economies -- those with a GNI per capita between $1,006 and $3,955; and upper middle-income economies -- those with a GNI per capita between $3,956 and $12,235 (2018), according to the World Bank.

Middle-income countries are home to 75 percent of the world’s population and 62 percent of the world’s poor. At the same time, MICs represent about one third of global GDP and are major engines of global growth.