Trillion-Dollar Prize Local Champions Leading the Way

Trillion-Dollar Prize Local Champions Leading the Way

The Bangladesh economy has displayed strong performance over the recent years and is on course to emerge as a USD1Tn economy in the coming decades. With an average annual GDP growth of 6.4% between 2016-2021, Bangladesh has outpaced major Asian peers such as India, Indonesia, Vietnam, Philippines, and Thailand. A key driver is the domestic consumer market–which is set to become the ninth-largest consumer market in the world through a rapidly expanding middle-and-affluent class projected to grow from ~19Mn in 2020 to ~34Mn by 2025. It is bolstered by a young workforce of ~114Mn people, a burgeoning gig economy with ~650k freelancers–the second-largest online workforce globally–and a rising digital adoption rate with ~177Mn mobile subscribers. Though the economy faces some near-term volatility, we are confident that this highly resilient economy will continue to demonstrate robust growth in the long term. Despite COVID-19, Bangladesh’s GDP grew ~3.4% in 2020, demonstrating the economy’s resilience during significant global economic disruption.

Bangladesh’s growth story is underpinned by some fundamental drivers – consumer optimism, a willingness to innovate in emerging economic sectors, the continued rise in middle and affluent consumers, an ambitious young workforce, and economic resilience.

Bangladesh’s digital economy continues to gain momentum, buoyed by growing connectivity and improved digital consumer interaction. Mobile cellular subscriptions almost doubled between 2012 and 2021, reaching ~177Mn, while internet subscriptions grew from minimal users to ~70% penetration in the last 10 years. This provides a fertile environment for the digital economy, with the volume of digital financial more than doubling from 1.7Bn transactions in 2019 to an estimated 3.5Bn in 2022.

No story is without ups and downs. The current economic climate has created some uncertainties, with liquidity challenges, foreign exchange risks, and inflationary pressures in the short term, but the measures the country is taking should allow Bangladesh to remain on its course toward a trillion-dollar economy.

Some of the Key findings from the study:

  1. The domestic consumer market is set to become the ninth-largest consumer market in the world through a rapidly expanding middle-and-affluent class which is projected to grow from ~19Mn in 2020 to ~34Mn by 2025
  2. More than two-thirds of the total population (68.4%) is of working age, with 114Mn working-age citizens ready to create value through employment
  3. 2nd largest supplier of online labor globally; home to ~15% (~650k) of world’s freelancers; 50,000+ FB entrepreneurs; behind only India at 24.8%
  4. Uber, Pathao, Truck Lagbe, and Foodpanda are expected to generate 500,000 jobs this year
  5. Bangladesh’s output per worker was just ~USD 8,000 in 2010, almost one-quarter that of LMIC countries (~USD 33,000). Today, it stands at ~USD 12,000, 56% higher than a decade before, experiencing much higher growth than the global average (22%) and LMIC nations (36%),
  6. Bangladesh’s R&D spending as a % of GDP is at just 0.3% in 2020, while the world average is ~2%. This results in Bangladesh being on the lower side of the global innovation index rankings; it’s ranked 102 out of 132 countries—behind Indonesia, Philippines, Vietnam, Thailand, and India
  7. The Startup landscape of Bangladesh has raised 300Mn in VC funding over the last decade
  8. The nation has a high savings rate, with average savings equivalent to more than a third (34%) of GNI, compared to a global savings rate of 27%

Note: This report was originally published by BCG

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