Shahnoor Wahid
Bangladesh is in a predicament of sorts. Like any other developing country, it wants its status elevated to that of a middle-income country, but at the same time it is aware that once graduated to MIC, it will have to let go of some facilities it has been enjoying so far as a least developed country. The country is scheduled to join the comity of Middle-Income Countries (MIC) in 2026. So, one can literally feel the euphoria in the air, as celebration has almost begun.
The Chief Adviser of the Interim Government Mohammad Yunus has stressed strong monitoring of all sectors so that every sector makes sure transition becomes smooth. He remained quite upbeat while saying there is no possibility of reversing the decision. We also believe no question of reversal can arise as long as all the socio-economic indicators remain as active and on the target. Unless something unexpectedly catastrophic happens to our economy, we can hope to reach the target in the stipulated time.
This is encouraging to note that the country has already met all the criteria required to achieve the status of MIC, especially in the three major categories –per capita income, human asset index and economic vulnerability index. If nothing happens to upset these three, we shall be there in 2026. This remains to be said that today the goal of the Middle-Income status seems so near but it took many years of hard work by various experts in various sectors. Undoubtedly, it was no easy sailing for this strife-stricken country to come where it has come now. The adversities it faced in its journey were both natural and man-made that definitely delayed our struggles in many fronts.
Middle Income Countries (MICs), as explained by the World Bank are a group of nations classified based on their per capita gross national income (GNI), between $1,086 and $13,205. Therefore, to be bracketed with these countries would significantly enhance the image of Bangladesh among the comity of nations.
MICs are divided into two subgroups: lower middle income (with a GNI per capita of $1,136 to $4,465) and upper middle income (with a GNI per capita of $4,466 to $13,845), according to the World Bank. Bangladesh is likely to fall in the first group of lower middle income.
According to the World Bank, Bangladesh’s GNI per capita (using the Atlas method) for 2023 was $2,880, a slight increase from $2,850 in 2022. This indicates a modest rise in the average income of Bangladeshis. The total GNI for Bangladesh in 2023 was approximately $454.87 billion in current U.S. dollars. While Bangladesh has experienced significant economic growth over the past decade, recent projections suggest a slowdown in GDP growth for the fiscal year 2025, with forecasts ranging from 3.3% to 3.9% due to factors like political uncertainty, high inflation, and financial sector vulnerabilities.
Touching the milestone of MIC is significant no doubt as far as reaching a desired status is concerned but we cannot remain oblivious to the fact that it also presents challenges, particularly for the readymade garment (RMG) sector, the backbone of our economy. It is feared by our economists that graduation is likely to end the preferential market access and international support measures. Bangladesh currently enjoys duty-free access to many developed markets, including the EU, due to its LDC status. Graduation means this will end, thereby impacting exports in general. It also means Bangladesh will no longer be eligible for concessional loans and grants from development funds.
Experts argue that the RMG sector of Bangladesh, which heavily relies on preferential market access, is likely to face challenges in retaining market share after LDC graduation. The country is also heavily dependent on textile and apparel exports and this shift in status could make it vulnerable to economic uncertainties and changes in trade patterns.
Economists and researchers suggest Bangladesh could go for diversification of its export basket and really look beyond the RMG sector and also find new markets.
We are sure our group of renowned economists and researchers will waste no time in finding answers to the challenges the LDC graduation will bring our way. They will give the right direction to the nation. While we rejoice at the scope of entering the MIC status next year, we at the same time will have to remain as one in strengthening our economy through hard work.
The writer is a senior journalist