Analysis of Sectoral Contribution on the GDP of Bangladesh

Posted in: Miscellaneous Jun, 16 2011 | 2 Comments

Current Scenario of GDP of Bangladesh

Bangladesh is a developing country. Though it does not have such a rich GDP condition, its total amount of GDP of 2008 is 78,992 millions of US dollars, and purchasing power parity is 213,504 millions of International dollars. Besides this, ours GDP per capita- current prices is $624 (2010 estimate) and PPP is $1,527 International Dollars (2010 estimate). With addition, the estimated GDP (PPP) – share of world total of Bangladesh is 0.36%. National Accounting Wing of Bangladesh Bureau of Statistics produces and disseminates estimates of fiscal year based (1 July-30 June).

Economic growth of Bangladesh is compiled of three main sectors. It will be helpful to understand about GDP of it. Here are the main sectors of GDP and theirs brief discussions:
As a developing country, Bangladesh has several production sectors which have greater contribution on GDP. They are playing important role over our GDP. The major sectors in this issue are:

• Agriculture (18.64%)
• Industry (28.61%)
• Service (52.76%)

Agriculture includes farming crops, animals, fishery and foresting contributions. Farming corps includes paddy, wheat, jute, vegetables, sugarcane, pulses etc; animal farming includes dairy, poultry, fishery, sericulture etc. Agricultures contribution to GDP is 18.64% (current prices) for the fiscal year 2008-2009 (Bangladesh Economic Review, 2008-2009).

Industry is the second largest sector in the percentage contribution to GDP which includes garments & knitting sectors, factories, leather industry, food and beverage etc. The contribution of Industry sector to GDP is 28.61% (current prices) for the fiscal year 2008-2009 (Bangladesh Economic Review, 2008-2009).
Service is the largest sector in the percentage contribution to GDP. It includes all services activities. It consists of trade service, construction, transport, storage and communication, housing, public administration and defense, education, health, financial intermediates such as bank, insurance and other social and personal activities. Service organization’s contribution of GDP of Bangladesh is 52.76% (current prices) for the fiscal year 2008-2009 (Bangladesh Economic Review, 2008-2009.)
Since the liberation war of 1971 the Scenario of GDP of Bangladesh is changing gradually. Bangladesh is an agricultural country. Earlier it had a great contribution over GDP. But gradually the contribution is changing. Now the biggest contributor of GDP is the Garments sector. In 1973/74 contribution of agricultural sector on GDP was 48.3%, and in 2008/09 it was about 18.64%. Instead of this the growth rate in the industrial contribution did not increase as much as Bangladesh would want. In 1973/74 the contribution from industrial sector was 11.1% and now (2008-2009) it is 28.61%. Political instability and inconsistent economic and industrial policy might have the consequent reasons. Meanwhile we saw a great increase in service industry’s contribution on national GDP, from 36% to 52.76%.
Real GDP Growth Rate of Bangladesh (2002-2009)

2002-  4.4%



2005- 6.4%




2009- 5.4%

Real GDP growth rate of Bangladesh of 2010: 5.88% (forecasted).

Here, we have seen that in last three years the GDP of Bangladesh is declining. Even the estimated GDP of 2009 is also low than the base year, 2006.

Sectoral Contribution on the GDP of Bangladesh:

  • Agriculture Sector

The broad agriculture sector comprises about 18.64% of the total GDP. The overall growth rate of the broad agriculture sector for FY 2008-09 is provisionally estimated at 4.8% in real terms over FY 2007-08 (See Appendix 2.5.4 and 2.5.5).

The sectors and sub-sectors performance under broad agriculture sector are presented below.

Agriculture and Forestry
Most Bangladeshis earn their living from agriculture directly or indirectly. The agriculture and forestry sector contributed about 16.03% of the total GDP in FY 2008-09, includes three sectors namely
• Crops and Horticulture
• Animal Farming
• Forest and related services

Although rice and jute are the primary crops, maize and vegetables has also greater importance. Due to the expansion of irrigation networks, some wheat producers have switched to cultivation of maize which is used mostly as poultry feed. Tea is grown in the northeast. Because of Bangladesh’s fertile soil and normally ample water supply, rice can be grown and harvested three times a year in many areas.
Due to a number of factors, Bangladesh’s agriculture has achieved steady increases in food grain production. These factors include better flood control and irrigation, a generally more efficient use of fertilizers, and the establishment of better distribution and rural credit networks. With 28.8 million metric tons produced in 2005-2006 (July-June), rice is Bangladesh’s principal crop. By comparison, wheat output in 2005-2006 was 9 million metric tons. Population pressure continues to place a severe burden on productive capacity, creating a food deficit, especially of wheat.
But our agriculture is still fighting with many problems. Seasonal hunger (“monga”) remains a problem. Underemployment remains a serious problem, and a growing concern for Bangladesh’s agricultural sector will be its ability to absorb additional manpower.

The growth rate of this sector for FY 2008-09 is provisionally estimated at 4.81% which was 2.93% in FY 2007-08. The growth rate of this sector is assumed higher compared to the previous fiscal year due to the increase of growth in crops and horticulture sub-sector.

Due to the higher production of food grains the growth is quicker than previous fiscal year.

The production of minor crops, which include pulses, spices, sugarcane, fruits, vegetables and
tobacco, is expected to be around the level of preceding year. These minor crops contributed about
30% to the total output of the crop sub-sector.
The output of the animal farming is likely to grow by 3.46% which was 2.44 %in the
previous year.

  • Fishery:

Total inland and marine catches as estimated by the Directorate of Fisheries (DOF) will be
4.81% higher in FY 2006-07 (2.44 million metric tons) than that in the previous year. The
fishery sector is likely to grow by 3.99% in FY 2006-07 compared with 3.91% in FY
2005-06. At constant prices the contribution of fishery sub-sector is 4.3% to the total GDP of
FY 2006-07. In FY 2008-09 estimated growth rate is 4.01% which is lower than the previous FY 2007-08, 4.18%.

  • Mining and quarrying:

Mining and quarrying is likely to sustain its growth with 10.02% in FY 2006-07 which is higher than 9.26% in FY 2004-05. Production of coal at Barapukuria is included in other mining sub-sector from January’06. Consequently, the growth rate of other mining sub-sector has increased by 8.90% in FY 2006-07 compared to 8.84% in the previous year. In FY 2008-09 estimated growth rate is 9.37% which is higher than previous FY 2008-09, 8.94%.

  • Industry sector:

The industry sector accounts for 28.61% of GDP at constant prices for FY 2008-09. The growth rate of the broad industry sector is provisionally estimated 5.92% for FY 2008-09 compared to 7.21% for FY 2007-08. It is a decline.


On the basis of data available up to January 2007 and also taking into consideration the trend of production, the growth rate of this sector for FY 2008-09 is provisionally estimated at 5.72% against 5.68% in the previous year. The growth of manufacturing was fueled mainly by the knitwear, ready-made garments and cotton textile. A brief analysis of the performance of this sector is given below:

Production of large and medium scale manufacturing industries, particularly knitwear, ready-made garments, cotton textile, pharmaceuticals, wood products, iron and steel, ceramic, cement, plastic products etc. showed substantial growth in the first seven months of FY 2006-07. The performance of other major industries registered significant growth except leather and leather products, paper and paper products and petroleum product.

Small and cottage industries showed a substantial growth during July-December, 2006 over the same period of the previous year.

Textile sector:

This sector is the most developing and prosperous source of Bangladesh. Textile industry, which includes knitwear and ready-made garments along with specialized textile products, is the nation’s number one export earner, accounting for 80% of Bangladesh’s exports of $15.56 billion in 2009. Bangladesh is 3rd in world textile exports behind Turkey, another low volume exporter, and China which exported $120.1 billion worth of textiles in 2009. The industry employs nearly 3.5 million workers. Current exports have doubled since 2004. Wages in Bangladesh’s textile industry were the lowest in the world as of 2010. The country was considered the most formidable rival to China where wages were rapidly rising and currency was appreciating.
After massive labor unrest in 2006the government formed a Minimum Wage Board including business and worker representatives which in 2006 set a minimum wage equivalent to 1,662.50 taka, $24 a month, up from Tk950. In 2010, following widespread labor protests involving 100,000 workers in June, 2010, a controversial proposal was being considered by the Board which would raise the monthly minimum to the equivalent of $50 a month, still far below worker demands of 5,000 taka, $72, for entry level wages, but unacceptably high according to textile manufacturers who are asking for a wage below $30.

  • Power, Gas and Water:

The growth rate of the power is expected to be 3.64% in FY 2008-09 as compared to 6.68% in FY 2007-08. There is a decreasing trend in the production of gas and 73% of total commercial consumption is fulfilled by gas. The total production of gas in FY 2004-05 and FY 2005-06 were 486.75 billion cubic feet and 522.55 billion cubic feet. The total estimated demand of gas for FY 2006-07 are 573.18 billion cubic feet which is 9.69% higher than actual production of the previous fiscal year. The growth rate of the gas and water is expected to be respectively 8.63% and 8.91% in FY 2008-09 as compared to 7.72% and 6.00% in FY 2007-08.

  • Construction:

Cement, iron and steel are the major inputs of the construction sector. The domestic production of cement in the first six months of FY 2005-06 is higher than that of the same period of previous year. The construction sector is, therefore, projected to grow by 5.72 percent during FY 2008-09 which was 5.68% in FY 2007-08.

  • Wholesale and Retail Trade:

The output of this sector is estimated a growth rate of 6.35% compared to 6.82% in FY 2007-08.

  • Transport, Storage and Communication Sector:

The transport, storage and communication sector is expected to achieve a growth rate of 7.61 %in FY 2008-09 which was 8.55% in previous fiscal year. Post and Telecommunication services stood at the forefront with a growth of 23.49% in FY 2006-07. Communication services, particularly the Mobile Phone Services (MPS) market continued to derive the telecommunications industry as strong which led to the high growth of Post and Telecommunication sub-sector. The contribution of this sector also increased in FY 2006-07 and stood at 10.21% of total GDP.

Real Estate, Renting and Business Activities Sector: The growth rate in this sector is provisionally estimated at 3.81% in FY 2008-09 compared to 3.75% in FY 2007-08.

  • Services Sector:

Total output of the services sector consists of the collective outputs of the wholesale and retail trade; hotel and restaurant; transport, storage and communication; financial intermediations; real estate, renting and business activities; public administration and defense; education; health and social work, and community, social and personal services activities. The sectoral share of the services sector is 52.76% of the total GDP. The contribution of cinema halls, cinema production houses, tele films/drama production houses and private TV channels have been considered and added from FY 2004-05.

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