Bangladesh overtakes India in per capita GDP, IMF says

Bangladesh overtakes India in per capita GDP, IMF says”

While most economies reopened, prompting the International Monetary Fund to improve its current forecast to somewhat over its June prediction, Gopinath said resurgences of the virus and other political uncertainties suggest the global economic recovery will be slow and uneven well into 2021. India's per capita GDP in PPP terms in 2020 was estimated by the International Monetary Fund at $6,284, compared with $5,139 per capita GDP (PPP) of Bangladesh for 2020, the report said.

"The revision is driven by second quarter GDP outturns in large, advanced economies, which were not as negative as we had projected; China's return to growth, which was stronger than expected; and signs of a more rapid recovery in the third quarter", it said. To accelerate a resilient recovery centered on jobs and economic transformation, the communique asked the World Bank to provide the knowledge, policy advice, and financial support to help countries strengthen social safety nets and facilitate the movement of capital and labour toward sectors that will be productive and sustainable in the post-pandemic context, while also providing the innovation needed to open up trade finance for SMEs and confront the challenges of informality. Its per capita GDP is growing at a rate faster than its GDP, reports UNB.

What makes this situation even worse is that till five years ago, India's per capita GDP was almost 40% higher than Bangladesh's.

According to the World Bank data, India's per capita GDP in 2014 stood at $1573.881 when Narendra Modi won a historic mandate to form a new government. It is calculated by dividing the GDP of a country by its population. This will lift India's per capita GDP to $2,030 next year, compared to $1,990.0 for Bangladesh. However, the trend is not expected to sustain for long as India's per capita GDP is then again expected to slip below Bangladesh's per capita GDP in 2024 to $2,544.26 as against $2,544.32.

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Nonetheless, IMF predicts a sharp economic recovery in India in 2021, which would boost its per capita GDP ahead of Bangladesh by a small margin. The report gives the economic forecast on a host of indicators up to 2025. Business surveys of purchasing managers show firms in the United States, euro area, China, and Brazil, for example, expanded output successively in July and August compared with the previous month, whereas the opposite was true elsewhere (for instance, in India, Japan, and Korea). It noted that "prospects have worsened significantly in some developing countries where where infections are rising rapidly" and that in India and in poorer nations in Africa and Asia, the pandemic has continued to spread and in some areas even accelerate.

According to the IMF's projection, India is projected to regain its position as the fastest-growing emerging market and developing economies in 2021, with 8.8 per cent economic growth, followed by China at 8.2 per cent.

Investment as a share of GDP had been falling in India even before the pandemic. Indian economy had witnessed a contraction of 17.5 per cent in 1991. Although India is not worse off than the eastern neighbour on these two counts now, Bangladesh is projected to fare better than India in 2022 and 2023. Exports had not dipped the way it did in India. In contrast, India's exports have stagnated in the recent years with declining savings and investment rates. The numbers are for all to see.

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