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Mfg industries playing vital role in economic growth

Published : 04 Nov 2020 09:51 PM | Updated : 06 Nov 2020 01:17 AM

The country’s manufacturing industry is playing a vital role in the growth of the economy, says the economic survey report 2020 prepared by economic division of the finance ministry.

Although at one time agriculture contributed the most structurally to growing economy, now that picture has changed. Agriculture has been replaced by services of products manufactured in industries. 

Data analysis shows that the manufacturing industry has been steadily increasing its contribution to the country's economy. The number of industries has also increased manyfold, especially over the past decade due to favourable policies.

This sector is now playing a major role in driving the economy which is growing at a steady pace.

The review of data from the Economic Survey 2020, shows that the contribution of agriculture to the economy has dropped to less than 15 percent. 

In the last five years, the contribution of the service sector has also decreased. On the other hand, the contribution of products manufactured in the industries has been steadily increasing.

According to the Economic Survey, the manufacturing sector is in the strongest position in terms of sector-wise contribution to gross domestic product (GDP). This position has been getting stronger over the last five fiscal years. 

For the first time in the 2014-15 fiscal year, the contribution of this sector to the GDP exceeded 20 percent. 

Since then, this contribution has increased to 21.01 percent in FY 2015-16, 21.74 percent in FY 2016-17, 22.85 percent in FY 2016-17, 24.08 percent in FY 2018-19 and 24.18 percent in the last FY 2019-20.

Many economists said that the country's service sector has been growing for a long time, which was a big contribution to the GDP. 

However, since 2015-16, the ratio of service sector to GDP has remained roughly the same, they said adding that, in the meantime, it has recently decreased a bit. There are indications of a new kind of structural change, they mentioned.

Dr KAS Murshid, Director General of Bangladesh Institute of Development Studies (BIDS), said, “I think after Vietnam, Bangladesh is also moving forward according to the 'flying gauge theory'.”

“We have heavy industries like steel and cement,” he said adding, “There is a shortage of chemical industry required for heavy industry to become more widespread. There are indications that this deficit will be addressed soon.”

The light engineering and electronic industries in Bangladesh are showing great development, he mentioned. Murshid said that when per capita income reaches a certain level, domestic demand is created. 

“That is why the demand for electronic products in the country has increased substantially,” he said adding that Bangladesh once was heavily dependent on importing raw materials. 

It is expected that these products will be exported soon after meeting the demand of the local market. The classical pattern of the economy refers to the advancement of the industrial sector, he said.

“The matter was almost dormant in Bangladesh. Now it is slowly being revealed. Among the countries in East and South Asia that are now considered to be the new industrialized nations, all except South Korea have advanced in the classical pattern,” he also said.