Bangladeshis will be richer than Indians by 2030 as the country’s per capita income will grow nearly four times throughout the 2020s, according to Standard Chartered — in yet another endorsement of its tremendous growth momentum.
The per capita income of Bangladesh will rise to $5,734.6 in 2030. India’s will edge up to $5,423.4 after growing less than three times, according to a research note from Madhur Jha, Standard Chartered India’s head of thematic research, and David Mann, the bank’s global chief economist.
Last year, Bangladesh’s per capita income stood at $1,599.8 and India’s $1,913.2.
The note highlights the economies around the world that are likely to grow the fastest in the 2020s.
The threshold for the list is 7 percent, the approximate growth rate at which an economy can double in size every 10 years.
“We think seven countries have the potential to be members of this club in the 2020s. Of these, Bangladesh and India hold the most promise.”
Speaking to The Daily Star, Naser Ezaz Bijoy, chief executive officer of Standard Chartered Bangladesh, said the country is experiencing a decade of strong and inclusive growth.
“With the tailwind of demographic dividend, healthy domestic consumption, rising investment, and successful export-oriented industrialisation, we have every confidence that our nation will continue on this high-growth trajectory in the 2020s and establish itself firmly in the 7 percent club.”
China was a member of the 7 percent club for nearly 40 years but has recently exited as its growth naturally slowed down. Ethiopia and India joined the club over the last decade, while countries such as Vietnam and Bangladesh came close.
“Young labour forces and accelerating structural reforms are likely to help both Bangladesh and India achieve growth well more than 7 percent in the coming decade.”
Within the 7 percent list, Bangladesh’s per capita income will be less than that of Vietnam and the Philippines in 2030, while it will be ahead of Ivory Coast, Ethiopia and Myanmar — apart from India.
Bangladesh has seen a growth acceleration since 2010, to an average of 6.4 percent, as a stable government, infrastructure investment and improved energy supply have boosted productivity gains.
The country posted more than 7 percent GDP growth in the last three fiscal years and is estimated to go past the 8 percent mark this fiscal year.
Its demographic profile is favourable, and investments in education and health have paid off.
“All of this has helped improve productivity. Low levels of public and external debt give the government room for counter-cyclical fiscal stimulus to support growth if needed.”
By 2030, the note expects India to become the world’s fourth largest economy (measured by market exchange rates) and Bangladesh to become the 23rd largest. The two countries together will account for about 20 percent of the global population by 2030, according to the United Nations.
Faster growth brings many benefits, including pulling large swathes of the population out of abject poverty, the research note said.
It, however, says faster growth does not make economies immune to periodic major downturns. Almost all of the countries that have been members of the 7 percent club since the 1960s have seen one or more major recession at some point.
Some emerged from recession and re-joined the club (like South Korea in the 1970s), while others dropped out and struggled to find their way back (like Thailand since 1997).
“The quality of growth matters as well as the quantity,” the note said.
The bank said the ability to tap external market demand and import skills, know-how and technology from the rest of the world has formed the basis of growth for all countries that have industrialised since the World War II.
Increasing globalisation and trade integration have been critical in this process.
“The recent rise of anti-globalisation sentiment and nationalist policies, especially in developed countries, poses a threat to sustained gains for both emerging markets and the global economy.”
The research note says increasing worries about climate change and sustainability could also curb emerging markets’ growth potential.
The urgency of addressing climate change concerns could usher in policy reforms across the globe, constraining the ability of some emerging markets to pursue fast-growth strategies.
“However, support from multilateral institutions and technology transfers from advanced economies could help achieve the opposite outcome — with infrastructure upgrades resulting in cutting-edge and environmentally sustainable capital stock.”