Exports and remittances drive Bangladesh economy
Bangladesh's dependence on remittances and exports of ready-made garments is acute and at risk of exogenous shocks
Source: Export Promotion Bureau, Bank of Bangladesh, media reports
Outlook
Despite the significance of ready-made garment exports to overall trade, the government’s investment in the safety of factories making them is seriously lacking. Rising consumer awareness, especially in the West, will force some change, but absent a major commercial shock, an overhaul of safety standards will not occur.
Similar policy complacency is evident on remittances, where flows from the largest source, Saudi Arabia, have fallen dramatically, largely due to the fall in oil prices. The risk to remittance income will rise longer-term as all major Gulf economies face domestic pressure to reduce reliance on foreign labour, and if popular sentiment continues to turn against immigrants in other important remittance sources, the United States and the United Kingdom.
Impacts
- Lack of free and fair elections erodes government accountability in such areas as factory safety, making future accidents a near certainty.
- Diversification of Bangladesh’s exports is unlikely for the foreseeable future.
- Remittances and foreign investment into the garments sector will prove resilient to terrorist attacks, provided they remain small-scale.