Unlocking the golden gateway: Developing the gold sector for export

In just 50 years, Bangladesh has transformed into a middle-income country, with a GDP skyrocketing from $9 billion to over $400 billion. Per capita income has surged from $137 to $2554, and agricultural output has quadrupled. Bangladesh aims to become a $500 billion economy, reaching upper middle-income status by 2031, and aspiring to become a developed country by 2041, as recognised by the World Bank.

Bangladesh’s development aspirations target high-income country status by 2041, requiring private investment and GDP to rise from the current 22% to 36.3%, FDI and GDP from 0.5% to 3%, and exports to reach $319 billion from $39 billion in 2021. 

In Bangladesh’s export landscape, the concentration is evident, with an average of 82.53% of total exports attributed to ready-made garments (RMG) from FY 2017 to FY 2021, leaving non-RMG items with a limited 17.47% share. The RMG sector, which has historically been a significant employment generator, is nearing its limits, and close to 60% of jobs held by low-educated groups may vanish by the mid-2030s. 

Diversification becomes even more pressing as Bangladesh transitions out of its LDC status, given that over 75% of its exports rely on LDC tariff preferences that will vanish post-graduation, affecting competitiveness. Additionally, uncertainties post-Covid and evolving consumer preferences, particularly those related to carbon footprints, underscore the necessity for Bangladesh to transition to higher-value products and adapt to changing global markets. 

Bangladesh grapples with a formidable challenge in the diversification of its export sector. Despite concerted efforts, the complexity of its product range remains limited, evident in the disconnected nature of the product space. Furthermore, the country’s export destinations have shown little variation, with the European Union and North America continuing to account for a substantial 77% of total exports. 

A significant hurdle in achieving rapid diversification lies in the absence of multi-product, multi-destination exporters within Bangladesh. This dearth of diversification presents a perplexing paradox, as it has failed to spark the expected shift towards more complex sectors, highlighting the formidable challenges the nation faces in this endeavour.

Bangladesh has made significant strides in its efforts to diversify its economy to date. The Perspective Plan 2041, a comprehensive roadmap, provides guidance and strategies for key sectors, including agriculture, trade, financial services, and telecoms, among others.

Complementing this plan, the Export Policy 2021–24 delineates high-priority sectors and special development sectors, aimed at fostering economic expansion and diversification. 

The ambitious Delta Plan 2100 further supports these initiatives, incorporating cross-cutting themes such as green growth, the expansion of small and medium-sized enterprises (SMEs), and increased female employment. These strategic frameworks underscore the nation’s commitment to enhancing economic diversification and sustainability.

The gold sector, though ranking low in product complexity, will be the sixth most traded commodity globally in 2020. Central banks hold a substantial 35,218.6 tonnes of gold, with the Eurozone owning 10,772.2 tonnes, constituting up to 59.1% of their total reserves. Notably, 2021 witnessed significant development, with a 67% increase in jewellery demand, a 31% rise in investments in bars and coins, and a 9% boost in technological usage. 

The increased demand coincided with the global economy’s recovery, resulting in a 10% rise in global gold demand to 4.021 thousand tonnes in 2021. The gold jewellery market, valued at $229.3 billion in 2019, is projected to reach $291.7 billion by 2025, reinforcing its enduring importance in the global economy.

In 2020, the global gold trade demonstrated its significant impact, ranking as the 6th most traded product with a total trade value of $422 billion. Notably, between 2019 and 2020, gold exports surged by 23.8%, growing from $341 billion to $422 billion, and accounted for 2.52% of total world trade. The top exporters of gold in 2020 included Switzerland ($68.5 billion), Hong Kong ($33 billion) and the United Arab Emirates ($28.8 billion). Meanwhile, the leading gold importers during the same period were Switzerland ($87.4 billion), the United Kingdom ($83.7 billion) and the United States ($48.2 billion). 

Bangladesh contributed to this trade, with an import share of 1.29% in 2020, equivalent to $357 million. These figures underscore the remarkable scale and…