Bangladesh - Market OverviewBangladesh - Market Overview
Bangladesh is a country the size of Iowa, situated in the northeastern corner of the Indian subcontinent and bordered by India and Burma, with a population of 156 million. * It is the eighth largest country in the world by population (larger than Russia), and the most densely populated of all countries other than city states. Bangladesh is an excellent potential market for U.S. exports.
With a growing middle class, Bangladesh attained the World Bank’s lower-middle income status in 2015 with a GNI per capita of $1,190. Bangladesh has enjoyed consistent annual GDP growth of over six percent since 2005. Much of this growth continues to be driven by exports from the $28 billion ready-made garments (RMG) industry, second in overall value to China, and continued remittance inflows expatriate labor, which reached $15 billion in fiscal year (FY) 2016. **
According to the International Monetary Fund (IMF), Bangladesh’s GDP reached $218.1 billion in FY 16 with an annual growth rate of 7.1 percent. Bangladesh’s economic growth has been complemented by sound fiscal policy and low annual inflation of 5.9 percent in FY 16. The Government of Bangladesh actively seeks foreign investment, particularly in the apparel industry, energy, power, and infrastructure projects. It offers a range of investment incentives under its industrial policy and export-oriented growth strategy, with few formal distinctions between foreign and domestic private investors. According to the IMF, Bangladesh received foreign direct investment (FDI) net inflows of $2 billion in FY 16, up from $1.8 billion in the previous year. Due to its consistent growth, Bangladesh estimated foreign exchange reserves increased from $24.9 billion in FY 15 to $30.2 billion in FY 16, the equivalent of 7.2 months of projected annual goods and services imports.
Bangladesh's export economy is dominated by ready-made garment manufacturing, but the country remains largely rural with an urbanization rate of only 34.3 percent of the population. While the agriculture sector employs 47 percent of the population, it accounted for only 15.1 percent of GDP in 2015. The industrial sector accounts for 28.6 percent of GDP and employs 13 percent of the population, primarily in the RMG and light manufacturing sectors. The services sector accounts for 56.3 percent of GDP and employs 40 percent of the population. The services sector, including information and communication technology (ICT) services, has strong potential for growth over the next decade.
Bangladesh has one of the lowest wage rates in the world, which has fueled an expanding industrial base led by the RMG industry; however, it is well-positioned to diversify its exports and move up the value chain. The country also has large pharmaceutical, agricultural-processing, and ship building industries. Other important sectors include construction, ICT and business process outsourcing, light engineering, leather products, jute products, and ceramic products. There is substantial scope for U.S. companies to enter the market and invest in these thrust sectors.
Dhaka, home to the Dhaka Stock Exchange, is the primary economic, political and cultural center of Bangladesh. Located on the coast, Chittagong, the second largest economic and financial hub of Bangladesh, hosts the country’s major seaport which handles 98 percent of container cargo and 92 percent of total cargo volume. Nearly twenty-six million Bangladeshis concentrated mainly in Dhaka and Chittagong have annual incomes exceeding $12,000, offering a sizable market for goods and services.
The United States was the number one export destination for Bangladeshi products, and Bangladesh is currently the United States’ 50th largest goods trading partner with $6.8 billion in total (two-way) goods trade during 2016. U.S. goods exports to Bangladesh totaled $895 million while goods imports totaled $5.9 billion, resulting in a U.S. goods trade deficit with Bangladesh of $5.0 billion in 2016. The top import categories (2-digit HS) in 2016 were: woven apparel ($3.8 billion), knit apparel ($1.4 billion), miscellaneous textile articles ($206 million), headgear ($174 million), and footwear ($105 million).
The top export categories from the United States to Bangladesh (2-digit HS) in 2016 were: miscellaneous grain, seeds, fruit (soybeans) ($249 million), cotton ($96 million), machinery ($83 million), food waste, animal feed ($72 million), and iron and steel ($72 million). U.S. total exports of agricultural products to Bangladesh totaled $496 million in 2016. Leading domestic export categories included: soybeans ($232 million), cotton ($95 million), soybean meal ($58 million), corn ($39 million), and animal feed and fodder ($22 million).
Bangladesh Trade Development and Promotion