General characteristics of the contemporary economic situation in Bangladesh

Bangladesh, despite the classification in the ranking of the poorest countries in the world, is steadily improving its economic situation. Significant successes were recorded in the reduction of extreme poverty, which now affects only 12.9% of the population. This is a significant decrease from 18.5% in 2010 and an incredible improvement compared to 1991, when 44.2% of the population lived below the poverty line. There has been a steady increase in life expectancy, literacy and agricultural production per capita. Bangladesh is characterised by a very fast population growth rate, with a natural growth rate of 1.05%. According to data from 2015, the unemployment rate covered only 4.9% of the population, however, the problem of part-time work was at the level of 40%.

Bangladesh is a beneficiary of many aid programmes and loans. In 2016, an agreement was signed with the PRC for infrastructure loans worth USD 40 billion, Japan decided to allocate USD 6.7 billion for the seaport project and Russia USD 11.4 billion for nuclear power plants. The Asian Development Bank is expected to provide USD 8bn in loans for investments in infrastructure and human capital for the period 2016-2020. Bangladesh is the largest beneficiary of aid from the International Development Agency (USD 24 billion since 1972), which declared a further USD 1.5 billion for a nutrition programme and USD 2 billion for the development of an emergency management system. Bangladesh will also receive one of the first loans granted by the Asian Bank for Infrastructure and Investment Development (USD 165 billion).

Economic relations with the EU

The EU’s relations with Bangladesh date back to 1973. In 2001, a Cooperation Agreement entered into force which significantly broadened the scope of cooperation between the partners and contributed to the development of trade. The agreement also set out the principles of cooperation between countries in the field of human rights and environmental protection. From 2014 to 2020, relations between the EU and Bangladesh will focus on three areas:

– Strengthening democratic governance

– food safety and nutrition issues

– education and skills development

According to data provided by the European Commission, EU trade with Bangladesh in 2014 focused mainly on imports, which amounted to EUR 12.3 billion (including EUR 11.056 million of clothing) – on this basis Bangladesh was ranked 29th in the group of partners exporting to the European Union. EU exports to Bangladesh were much smaller and amounted to EUR 2.017 million, which in the ranking of EU importing partners placed Bangladesh on the 66th position. The main imports were textiles, which together accounted for 92.5% of the total imports between the EU and Bangladesh. The EU exported to Bangladesh mainly machinery and equipment, which constituted 52% of the total export from the EU.

Bilateral economic agreements

The following economic agreements shall apply between Bangladesh and Poland:

Agreement between the Government of the People’s Republic of Poland and the Government of the People’s Republic of Bangladesh on technical and scientific cooperation of 16.03.1974;

Convention between the Government of the Republic of Poland and the Government of the People’s Republic of Bangladesh on the avoidance of double taxation and the prevention of tax evasion on income of 08.07.1997;

Agreement between the Republic of Poland and the People’s Republic of Bangladesh on mutual support and protection of investments 08.07.1997.

In 2016, the export from Poland to Bangladesh amounted to approximately USD 31 million. The highest value export goods included: wood pulp, paper and cardboard (USD 5.3 million); mechanical and electrical equipment for sound recording and reception (USD 4 million); plastics, rubber and derivatives with a total value of USD 3.5 million; and live animals and animal products with a value of USD 3.4 million.

Imports from Bangladesh to Poland were dominated by textile materials and products with a total value of USD 1 billion – Bangladesh is ranked 2nd in the world in terms of exports of finished clothes. Their importers are, among others, Polish clothing companies and retail chains. Shoes, headgear, umbrellas, walking sticks, feathers, artificial flowers worth 40 million USD also occupy an important position in the import to Poland.

In the first half of 2017 an increase in trade was recorded – Polish exports grew by 71%, the most important export items in this period were broadcasting equipment for radio-telephony, radio-telegraphy, radio and television for USD 3.8 million, ship cranes for USD 3 million and milk and cream for USD 2.1 million. Imports increased by 8%, with textiles and textile products dominating for USD 594.8 million.

The data of the National Bank of Poland do not record that companies registered in Bangladesh make direct investments in Poland. Similarly, NBP data do not show any investments of Polish business entities in Bangladesh. Due to the significant geographical distance and low intensity of economic contacts, regional economic cooperation is not developed.