Bangladesh’s economy in solid position despite global downturn: Economists

Highlights:

• Economists described Bangladesh as very resilient in the economic crisis.
• To meet the challenges, they emphasised product diversification as well as market diversification, signing more bilateral free trade agreements and preferential trade agreements, increasing solar power production and gas exploration, and supplying more skilled workers to the global labour market 
• PRI Chairman Zaidi Sattar said, "For global geopolitical reasons, some export opportunities are coming to Bangladesh. So this is also a hope to increase our exports."
• Sanem Executive Director Professor Selim Raihan said, "If GDP falls from 7.5 to 5.5% that would still be high growth in the current global context."  

Bangladesh's economy is "not at risk, rather it is in a consolidated state" despite the ongoing global economic downturn, economists and policymakers said at a roundtable on Saturday.

"My estimate is a bit optimistic. If the ongoing process of imports is effective, and if it can be kept at $80 billion, which was $82 billion in the last fiscal year, exports at $55 billion, and remittances at $24-25 billion, then we can move from current account deficit to surplus," said Zaidi Sattar, chairman of the Policy Research Institute (PRI). 

"Then, we will recover from the balance of payments shocks. And reserves may increase a little," he told the discussion on "Challenges of Global Slowdown and Bangladesh" organised by the Editors Guild, Bangladesh at the Dhaka Gallery.

The economist said the post-Covid situation, the Russia-Ukraine war, an increase in fuel and food prices and around 20% appreciation of dollars internationally have created a problem in Bangladesh's balance of payments.

"It's an import-driven problem that has driven up our inflation. But our big problem is the current account deficit," he added.

The PRI chairman said, "For global geopolitical reasons, some export opportunities are coming to Bangladesh. So this is also a hope to increase our exports."

Professor Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem), said the current challenge of the global downturn will slow down Bangladesh's growth.

"It is realistic to accept some lower growth. If GDP falls from 7.5 to 5.5%, that would still be high growth in the current global context," he added.

In spite of various challenges, he pointed out some hope in terms of exports to Europe and the US markets, he said, "Our main export products fall into the basic needs of consumers in Europe and North America. So, it offers us some hope."

Economist KAS Murshid said, "We have never faced such uncertainty before. So it is impossible to make any forecast. If there is no control over the global situation, we are left completely at our own devices. We are lucky that we have a very dynamic domestic market."

Putting emphasis on non-farm, farm and industrial sectors, he said, "We need to encourage smaller guys. They are very dynamic."

At the discussion moderated by Editors Guild President Mozammel Babu, the economists said the comparison of Bangladesh with Sri Lanka is irrelevant in terms of import, export, remittance and labour migration rate.

They described Bangladesh as very resilient in the economic crisis.

To meet challenges, they emphasised product diversification as well as market diversification, signing more bilateral free trade agreements and preferential trade agreements, increasing solar power production and gas exploration, and supplying more skilled workers to the global labour market. 

Shamsul Alam, state minister for planning, said remittances and exports have decreased in one month. But analysing one month's data is very risky, the trend is not clear.

"At least if we look at one quarter (July-September), we see remittances have increased by 4.8%. Remittances fell by 19.44% last year. $2 billion of remittance is arriving per month. If the trend continues, we will get $24-25 billion by the end of the year," he added.

He mentioned that about one million people went abroad in the last financial year. More people will go to the Middle Eastern countries as the economies are vibrant amid high oil prices.

"Compared to the same period of last year, exports increased by over 13% in the July to September quarter and imports fell by about 17%. That means the pressure on the dollar will decrease gradually." 

The state minister said Bangladesh received $3.63 billion of foreign direct investment (FDI) in the last quarter. It was $2.5 billion at the same time last year. So it is also positive.

Pointing to the positive progress in external borrowings with the World Bank and the International Monitoring Fund (IMF), he said, "The question of bailout does not arise in these borrowings, rather our position is much consolidated solid."

Former state minister of foreign affairs Abul Hasan Chowdhury said, "We can turn the crisis into a possibility. All these years we have only been talking about product diversification, not market diversification. Now we have to use the opportunity to increase exports to China, Singapore, South Korea, Latin America and India."

Abul Kalam Azad, former principal secretary to the prime minister, said, "Our credit situation is good. We have never defaulted on loans in the last 13 years."

Former foreign secretary Shamsher M Chowdhury, energy expert Badrul Imam and Ainul Islam, general secretary of Bangladesh Economic Association, among others, spoke at the event.