What is the importance of remittance in the Bangladeshi economy

The majority of developing nations rely on the money returned home by their nationals to support their economies. We refer to this as remittances since people typically travel to nations with higher living standards than their own. The Bangladeshi economy, like that of other emerging nations, depends heavily on foreign money. Many families in this country rely on the money they send to support themselves, and it plays a significant role in the national economy because a substantial portion of the population works overseas. Statistics show that Bangladesh collected over 24 billion dollars in foreign exchange earnings in September 2024, demonstrating the steadiness of the country’s foreign exchange earnings despite global economic uncertainty.

Nonetheless, there are a few explanations for why remittance is so significant to our nation. For instance, the following:

1. A rise in foreign exchange reserves

A sizable amount of remittance increases Bangladesh’s foreign exchange reserves. It is currently approaching 255 billion US dollars by the end of 2024, which serves as a benchmark for the soundness of the nation’s economy.

2. Reduction of poverty

With remittance, families in the nation may pay for their daily needs, health care, and education, raising their standard of living and reducing poverty.

3. Stability in the economy

International demand affects international exports, although remittances are largely constant. It provides a reliable source of revenue for the nation’s economy.

4. Human resource investment

This financial power is frequently used to support the nation’s skill and education systems, which guarantees long-term economic growth.

The importance of remittance: reasons behind its contribution to the country’s economy. | Photo collected.

When we think about how remittance affects Bangladesh’s economy, the following things come to mind:

1. Contribution to GDP

Remittance is a significant contributor to Bangladesh’s GDP. It boosts domestic economic activity by giving the nation’s households more purchasing power.

2. Reduction in the trade deficit

Remittances contribute to filling a portion of Bangladesh’s long-term trade deficit. A major contribution to closing this deficit has been made by the $2.4 billion that was received in September 2024.

3. The stability of currencies

Remittance-derived foreign cash helps keep the country’s currency stable and under control of import inflation.

4. The development of rural areas

Migrant laborers reside in rural areas in significant numbers. Small companies, agriculture, and rural housing are all aided by the funds received.

The impact of remittance on Bangladesh’s economy: boosting foreign reserves and fostering development. | Photo collected.

Many facets of social and economic growth in underdeveloped nations like Bangladesh are facilitated by remittance. They boost the nation’s foreign exchange reserves, which promotes international trade and preserves the stability of the national currency. Additionally, by balancing the cost of imports, remittances compensate for the trade deficit. 

Due to its ability to allow families to invest in vital sectors like housing, healthcare, and education, this income directly contributes to the eradication of poverty. Particularly in rural areas, it aids in regional development and the enhancement of quality of life. Remittances are a debt-free, sustained economic flow that does not put a financial strain on the nation, in contrast to loans or foreign aid. Furthermore, they are a reliable source of revenue even in recessionary times. Together, remittances are crucial to Bangladesh’s inclusive growth and economic stability.

Remittances are more than just financial earnings for a developing nation like Bangladesh; they are a productive way to promote economic stability, reduce poverty, and advance the economy. To fully utilize this income, it is indispensable that governments take the necessary actions. Because of this, remittance can be a very effective weapon for Bangladesh’s long-term growth.

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