HSBC: Consumption propelling growth in Bangladesh

‘We think the country is on the cusp of an industrial revolution as incomes rise and technology plays an ever-increasing role in the economy’

Bangladesh’s economy has remained resilient and maintained a strong growth momentum despite disruptions created by the Covid-19 pandemic as consumption propelled growth in the country, according to HSBC.

The global bank made the observation on Wednesday at a webinar titled “Bangladesh Market Insights 2021: Consumption Propelling Growth.”

Devendra Joshi, equity strategist of ASEAN and Frontier Markets of HSBC Global Research, said in his keynote presentation that the resilient growth witnessed by Bangladesh has been driven by investment and consumption.

“The Bangladeshi stock market deserves more attention as it holds opportunities for investors looking for diversification and hidden gems,” he said.

He added that as the global growth forecast has been raised this year, Bangladesh has to rebuild its inventories to meet the demand.

Joshi further said that as oil prices are expected to rise, so will remittances. He also pointed out that the Bangladeshi taka has been quite stable against the US dollar.

Comparing Bangladesh to Vietnam, Joshi noted that both countries are geared towards domestic consumption.

“Bangladesh is on a similar growth trajectory to Vietnam. In fact, its stock market is where this ASEAN nation was five years ago, and it is well placed to start closing the gap,” Joshi explained.

“We think the country is on the cusp of an industrial revolution as incomes rise and technology plays an ever-increasing role in the economy. Urbanization, smaller households, and more women at work are powerful consumption drivers that support high levels of growth,” Joshi added.

He also said that Bangladesh’s economy is much larger than Vietnam and is growing at a much faster rate.

In his presentation, Joshi also pointed out that Bangladesh has a sound macro position and a robust external balance sheet with low external debt and high foreign exchange reserve coverage.

Its foreign direct investments (FDI) remain low but are expected to improve as it moves up the value-added ladder fast.

While Bangladesh is one of the cheapest places to manufacture goods in Asia, it will need to diversify away from garments.

In terms of ease of doing business, Bangladesh still lags behind Vietnam but is making efforts to improve, the HSBC strategist also said.

Speaking as the guest of honour at the webinar, Sandeep Uppal, global co-head of International Subsidiary Banking of HSBC Asia-Pacific, said that intra-Asia trade has significantly risen in recent years.

But he noted that although the Asian region accounts for 60% of the global population, it accounts for only 40% of the global GDP.

Dr Ahmad Kaikaus, principal secretary to Prime Minister Sheikh Hasina, also spoke at the event as the chief guest.

“The economy of Bangladesh is seeing continuous growth because of the entrepreneurial spirit of its people, strategic location, and support from the financial sector,” Dr Kaikaus said.

“We are energized to do better and showcase our success stories through increased public-private partnerships and reach Bangladesh’s competitiveness globally,” he added.

HSBC Bangladesh CEO Md Mahbub ur Rahman said that in its past 50 years, Bangladesh’s trajectory of economic growth has been a testament of the people’s insatiable desire and effort to do better.

“Continued digitalization and upgrade of technology, consistent rise in per capita income leading to incremental consumptions, and demographic dividend have been opening up a world of opportunities for Bangladesh,” he added.

“Historically, the private sector has always been resilient during challenging times and HSBC will continue to play its part through unparalleled international network and connectivity,” Rahman further said.

Kevin Green, country head of Wholesale Banking at HSBC Bangladesh, also spoke at the event alongside key members of the business community, regulatory bodies and representatives from state-owned enterprises.

Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) and vice-chairman of Bengal Group of Industries, attended the webinar as the special guest.