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- GDP (PPP):
- $576.5 billion
- 6.4% growth
- 6.3% 5-year compound annual growth
- $3,607 per capita
- Inflation (CPI):
- FDI Inflow:
The fragile rule of law continues to undermine economic development in Bangladesh. Corruption and marginal enforcement of property rights drive people and enterprises into the informal economy, and poor economic management, worsened by repeated political crises, severely constrains economic dynamism.
Despite some streamlining of business regulations, entrepreneurial activity is hampered by an uncertain regulatory environment and the absence of effective institutional support for private-sector development. The government’s inability to provide even minimal public goods further limits opportunities for business development and job growth.
Prime Minister Sheikh Hasina was reelected in January 2014 in an election marred by an opposition boycott. A year later, when antigovernment demonstrations and a transport blockade fueled violence that killed over 120 people, the government jailed over 7,000 opposition members. Extremist attacks against liberal bloggers, religious minorities, and foreigners have risen alarmingly since 2013. A major terrorist attack on a café in Dhaka in July 2016 that killed 22 people has led to concern that international terrorist groups like the Islamic State and al-Qaeda are linking up with local militant groups. Despite the political turmoil, a decade of fairly rapid economic growth has contributed to progress against persistent poverty.
Property laws are antiquated, and property rights are enforced unevenly. The judiciary is not independent. Procedures for contract enforcement and dispute settlement are inefficient. Endemic corruption and criminality, weak rule of law, limited bureaucratic transparency, and political polarization have undermined government accountability. Anticorruption efforts are weakened by politicized enforcement and subversion of the judicial process.
The top income tax rate is 25 percent, and the top corporate tax rate is 45 percent. Other taxes include a value-added tax that is being reformed. The overall tax burden equals 8.6 percent of total domestic income. Government spending has amounted to 14.1 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.4 percent of GDP. Public debt is equivalent to 34.0 percent of GDP.
The costs of getting necessary permits and establishing a company have been reduced considerably. A well-functioning labor market has not been fully developed, but labor productivity growth has been slightly higher than wage hikes. Although somewhat less costly in 2016 due to low oil prices, the government’s extensive subsidizing of basic food staples, fuels, fertilizers, and electricity continues to hamper economic growth.
Trade is moderately important to Bangladesh’s economy; the value of exports and imports taken together equals 42 percent of GDP. The average applied tariff rate is 10.7 percent, and the government has taken steps to reduce bureaucratic barriers to trade and investment. Government ownership and interference in the financial sector remain considerable, undermining efficiency and growth.