How taka’s drop ate away economic output per person

The rapid depreciation of the taka against the US dollar has had a noticeable impact on the country's economic growth, as evidenced by recent gross domestic product (GDP) data published by the Bangladesh Bureau of Statistics (BBS).

The GDP per capita, in terms of the taka, had undergone a steady growth from fiscal year 2020-21 to 2022-23, rising from Tk 208,751 to Tk 262,868.

It was Tk 294,191 in the current financial year, meaning it rose 12 percent year-on-year.

The GDP per capita, in terms of the US dollar, however, has not followed the same trend.

It rose from $2,462 in FY21 to $2,687 in FY22.

However, it fell to $2,643 in FY23 before slightly recovering to $2,675 in the current fiscal year, up 1.2 percent year-on-year.

The fluctuation indicates that the growth of the economy, when measured in dollars, has been lower than initially projected, due to the weakening of the taka.

A similar pattern is observed in gross national income (GNI) per capita.

It climbed in terms of the taka from Tk 219,783 in FY21 to Tk 306,144 in FY24, meaning that it underwent a rise of 39 percent.

In terms of the US dollar, it went from $2,591 to $2,784, meaning an increase of 7 percent during the four-year period.

This suggests that while Bangladesh's economy is growing in terms of the local currency, the sharp depreciation of the taka against the dollar is, in fact, preventing the GDP per capita from swelling.

This also highlights the importance of restoring the exchange rate stability.