Introduction

Bangladesh, with a population of more than 160 million, is a lowincome, food-deficit country.
Over 40% of the population is children. Three-quarters of Bangladeshis live in rural areas. The
country sits within the worlds largest delta, making it extremely vulnerable to floods, and
cyclones.
In the past decade, Bangladesh has made impressive economic and social progress towards
achieving some of the Millennium Development Goals (MDGs), despite repeated natural
disasters and external shocks. Bangladesh has met the MDGs for gender parity in education and
has made impressive progress towards achieving universal primary enrolment. According to the
Bangladesh MDG mid-term report of 2007, the net enrolment ratio in primary education was
87%. The average GDP growth over the last six years was over 6%. Although poverty fell from
57% of the population in 1990 to 40% in 2005, challenges remain in eradicating extreme hunger
and malnutrition.
Indeed, the global food and fuel price crisis in 2008 and the Cyclone Sidr in 2007 have tested the
resilience of the Bangladeshi people. A nationwide survey conducted by WFP, UNICEF and the
government in December 2008 to assess the impact of high food prices on the population
revealed significant food insecurity (one in four Bangladeshi) and increased severe (stunting,
underweight and wasting) malnutrition rates.
The global financial crisis could compound this situation. The economy is indeed increasingly
exposed to global shocks as a result of increased openness to the global economy.
Global Economy
The global economic recovery remains moderate, with uneven prospects across the main
economies and regions. Growth in advanced economies in the first half of 2015 remained modest.
For most emerging market economies, the continued growth slowdown reflects several factors,
including lower commodity prices, tighter external financial conditions and downward pressure on
currency. Increasing the US policy rates from the zero lower bound is an indication of further
tightening of external financial conditions. Rebalancing in China and economic distress related to
the geopolitical factors and its cross-border repercussions appeared larger than previously
envisaged.
Global economy is the economy of the world, considered as the international exchange of goods
and services that is expressed in monetary units of account (money). In some contexts, the two
terms are distinguished: the "international" or "global economy" being measured separately and
distinguished from national economies while the "world economy" is simply an aggregate of the
separate countries' measurements.
Bangladesh Economy
The Economy of Bangladesh is the 32nd largest in the world by purchasing power parity and is
classified among Next Eleven emerging market economies in the world. According to IMF,
Bangladesh's economy is the second fastest growing major economy of 2016, with a rate of
7.1%.Throughout last decades, Bangladesh averaged a GDP growth of 6.5%, leading the country to
becoming an export-oriented industrialization. In recent years, Bangladesh have seen a major surge
in export as Bangladesh textile industry, second largest in the world, along with emerging
Pharmaceutical, Defense, and IT industry. The country's exports are projected to cross US$50
billion by 2021.

Effects of the Global Economy on Bangladesh Economy

Remittance:
Bangladesh is affected by the global financial crisis through the reduction of remittances,
migration, ready- made garments and agricultural exports (shrimp and tea). The economy is
heavily dependent on migrants earnings in the Gulf countries and Western countries. Bangladesh
is in the fifth position among the top remittance recipient countries in the world. The inflows of
remittance rebounded and increased by 7.65 percent in FY 2014-15,amounting to US$1 5, 316.90
million, compared with the negative growth of 1.61 percentage year earlier. Exports take up 20%
of the GDP. Exports of ready-made garments (RMG) represent 80% share of total exports.
Almost half of the exports go to the Europe, while 25% goes to the United States.

Fig. Trends of Remittance (Source: Bangladesh Bank)

Balance of Payments
The Balance of Payments (BoP) accounts reveal that trade deficit widened significantly from
US$6,794 million in FY 2013-14 to US$9,917 million in FY 2014-15. Despite 7.6 percent
growth in inward remittances, higher trade deficit along with 12.91 percent increased in service
account and 13.66 percent increased in primary income account lowered the current account
surplus from US$1,406 million in FY 2013-14 to deficit of US$1,645 million in FY 2014-15.
The capital and financial accounts recorded a surplus of US$5,641 million, from US$3,411
million over the same period. The deficit of the current account balance is offset by the capital
and financial account surpluses, leading to the overall balance increased to US$4,373 million
from US$5,438 million a year earlier. Higher net medium and long term credits, large deficit in
net trade credit lead the increase of overall balance of the Balance of Payments.
Migration decreased by 40% in January-March 2009 compared to the same period in 2008.
Approximately 8,000 Bangladeshi workers abroad were deported in February 2009, a near
doubling compared to the previous year.
Although remittances are still high at trend levels, there are signs of deceleration since February
2009, with a drop of remittance flows by 8.7% compared to January.

Fig. Trends of Remittance (Source: Bangladesh Bank)

Ready Made Garments:

The performance of readymade garment (RMG) industry in Bangladesh during the pre (20012007) and post (2008-2013) global economic crisis periods. The study had applied the descriptive
analytical technique to explain and compare the effects of crisis based on the actual available data
and information and the closely relevant studies. The findings of the study showed that
Bangladeshi garments sector experienced only a small reduction in its trade operations and that
the crisis did not have significant impact on the RMG sector of Bangladesh. Based on this finding,
it was concluded that the RMG industry was not affected due to global economic crisis. It was
further recommended that there is an urgent need for sound export policy, monetary and fiscal
stimulus package, diversification of product export market and backward and forward linkage in
order to increase the profitability and decrease the negative impact of financial crisis on the
performances of RMG sector.

Table 1: Growth of garment factories in Bangladesh

Pre-global economic crisis periods
Post-global economic crisis
i d
Fiscal Year
Number of Factories
Fiscal Year
Number of
F 4743
t i
2001-02
3618
2007-08
2002-03
3760
2008-09
4925
2003-04
3957
2009-10
5063
2004-05
4107
2010-11
5150
4220
2011-12
2005-06
5400
2006-07
4490
2012-13
5876
Source: BGMEA Website 2013

Table 2 : Export performance of RMG industry in Bangladesh

Pre-global economic crisis
Fiscalperiods
Export of RMG( In million
Y
US$)
2001-02
4583.75
2002-03
4912.09
2003-04
5686.09
2004-05
6417.67
2005-06
7900.80
2006-07
9211.23

Post-global economic crisis

periods Export of RMG( In
Fiscal Year
illi US$)
2007-08
10699.80
2008-09
12347.77
2009-10
12496.72
2010-11
17914.46
2011-12
19089.69
2012-13
21515.73

Source: BGMEA Website 2013

Conclusion
Understanding the effects of the global economic impact on Bangladesh is very important for the
economists and the policy makers in Bangladesh. Bangladesh, though not so much financially
integrated with the world, depends significantly on foreign trade. More specifically, Bangladeshs
exports, including readymade garments, shrimps, leather, etc. are heavily dependent on the demand
of the consumers in the developed countries. So the global economic condition has a great impact
on the economy of Bangladesh as in export, import, foreign direct investment (FDI) and foreign
aid inflows. All these has concomitant effects on the countrys various socio-economic indicators
including the gross domestic product (GDP) growth rate and per capita income.