Mainul Hossain Pinnu: 

A few years ago, Bangladesh and Vietnam were often mentioned together in discussions about emerging economies in South and Southeast Asia. Bangladesh was frequently highlighted as a promising economy in areas such as ready-made garment exports, rapid economic growth, poverty reduction and various development indicators.

However, that picture has begun to change in recent years. While global uncertainty, high inflation, pressure on foreign exchange reserves and slowing investment have weighed on economies, countries such as Vietnam, the Philippines and Sri Lanka have moved ahead rapidly.

The World Bank’s latest income classification provides fresh evidence of this shift. In its updated 2026 classification, Vietnam, the Philippines, Sri Lanka, Jordan and Micronesia have moved from the lower-middle-income category to the upper-middle-income category. Togo, meanwhile, has moved from the low-income category to lower-middle-income status.

Bangladesh, however, remains a lower-middle-income country.

Every year, the World Bank classifies the world’s economies into four income groups based on gross national income (GNI) per capita from the previous calendar year. This year’s classification shows that several countries competing with Bangladesh have already reached a higher income level.

The most prominent example is Vietnam. Bangladesh’s major competitor in ready-made garment exports has now become a global manufacturing hub not only for apparel but also for electronics, semiconductors, mobile phones, components and high-tech products.

According to World Bank data, Vietnam’s GNI per capita rose to $4,970 in 2025, exceeding the $4,636 threshold for upper-middle-income countries.

The World Bank said Vietnam’s exports grew by more than 15 percent in both 2024 and 2025. GDP growth stood at 7 percent and 8 percent respectively during the two years. From 2021 to 2025, the country’s GNI grew at an average annual rate of 10 percent, one of the strongest sustained growth rates in Asia.

Vietnam is not the only country to have advanced. The Philippines has also moved into the upper-middle-income category through expansion across almost all sectors of its economy.

Sri Lanka, meanwhile, recovered from its unprecedented economic crisis in 2022 and reached the same income category within just three years. Jordan moved up following a reassessment of its national accounts, while Micronesia advanced through stable economic growth.

According to analysts, these countries share several common characteristics behind their progress—including policy continuity, export diversification, attracting foreign investment, infrastructure development and increased productivity.

Bangladesh, on the other hand, remains heavily dependent on the ready-made garment sector. Limited progress in electronics, technology products and high-value-added industries has kept the country’s export base relatively narrow.

Former BGMEA director Mahbubuddin Rubel said Vietnam’s move into the upper-middle-income category sends a strong message to Bangladesh.

He said the development shows that significant economic progress can be achieved within a relatively short period if a country ensures consistent economic reforms, export diversification, skilled human resources, infrastructure development and an investment-friendly environment.

According to him, Vietnam did not rely solely on garment exports. Instead, it made substantial investments in electronics, technology products and high-value-added industries. At the same time, it implemented long-term plans to attract foreign direct investment, develop port and power infrastructure, expand technical education and create a skilled workforce.

Mahbubuddin Rubel said Bangladesh’s biggest challenges now are export diversification and increasing productivity.

He said special incentives should be provided for pharmaceuticals, electronics, engineering products, the chemical industry and high-value-added apparel alongside the garment sector. At the same time, Bangladesh needs to ensure policy stability to attract foreign investment, improve the effectiveness of special economic zones, simplify customs and administrative procedures, and accelerate investment in port and energy infrastructure.

According to analysts, Bangladesh has not yet fallen out of the development race. However, as competing countries rapidly move into higher income categories, there is little room for further delays in reforms and investment.

To reach the upper-middle-income category in the next decade, Bangladesh will need to make more effective efforts toward structural economic reforms, export diversification, skilled human resource development and attracting global investment.

/SA/02/08/2026/