Business leaders, economists fear political instability will deepen economic woes

Business leaders and economists have expressed concern that the growing political instability in the country in the lead-up to the upcoming national polls could disrupt industrial production and trade. They have warned that if the political unrest escalates, it will exacerbate the crisis in the country's business, commerce, and in the overall economy.

They have urged political parties to avoid pursuing policies or programmes that could negatively impact the economy.

They expressed these worries following a day of violence in the capital over the political rallies organised by the ruling Awami League and the opposition BNP and Jamaat-e-Islami. The BNP and Jamaat have called a nationwide dawn-to-dusk hartal for Sunday.

Business leaders say for over a year, the country's economy has been grappling with a range of internal and international challenges. Domestically, it faces formidable issues, including a dollar crisis, soaring inflation, a decline in remittance income, and sluggish investment. Furthermore, global crises such as the Russia-Ukraine war and the recent Israeli invasion of Palestine have also taken a toll on the economy.

According to them, the addition of internal political crises to international issues will have severe repercussions on the overall economy. If there is a disruption in the domestic supply chain, it will inevitably lead to higher product prices in the market and disruptions in industrial production.

Consequently, the supply of goods from Bangladesh to the global market will face hindrances. If the political crisis in the country intensifies, international buyers are likely to explore alternative sources, they said.

Mir Nasir Hossain, former president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), told The Business Standard that the economy depends on the political situation. He said that the economy is currently going through tough times, with businesses unable to open letters of credit due to a dollar shortage and factories unable to produce fully due to a lack of raw materials.

"In this situation, any new tensions will intensify the crisis," he said, urging political parties to prioritise the economy. He also said that recent political incidents have caused anxiety among traders.

Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry (MCCI), told TBS that Bangladesh has effectively managed the Covid-19 pandemic, largely due to the responsible actions of relevant parties. However, the economy is currently facing various challenges, including inflation, due to the Russia-Ukraine war.

"In this context, any instability resulting from the actions of political parties will magnify the economic challenges," he said.

He also noted substantial progress in the country's infrastructure sector over the past few years, sparking renewed interest from among local and international investors. "Many anticipate that Bangladesh will emerge as a key manufacturing hub in the future, and local entrepreneurs eagerly await a stable national election. Any form of instability during such a crucial period is highly undesirable."

Saiful Islam also emphasised the importance of political stability in safeguarding the well-being of the general people and preventing unwarranted interference from what he called "the third party".

"Business leaders are hopeful that politicians will give due consideration to these matters in their agendas. It is imperative for everyone to bear in mind that negative perceptions of Bangladesh should not be disseminated to the global community," he said.

Faruque Hassan, president of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), said, "Buyers' demand is on the decline, and in the event of domestic instability, the export-focused ready-made garments (RMG) industry will face significant challenges. Dissatisfied buyers might seek alternative sources, which will place additional pressure on the economy."

Jahangir Alamin, former president of the Bangladesh Textile Mills Association (BTMA), emphasised the dire situation in the country's textile sector and other industries. He stressed that any form of political instability during such challenging times could be devastating for these companies.

"Business leaders unequivocally desire peaceful and fair elections, and they fully support political parties taking proactive measures to ensure such conditions," he said.

Economist Ahsan H Mansoor, executive director of the Policy Research Institute (PRI), told TBS that every time an election approaches, it triggers a destabilising atmosphere that the entire nation has to bear.

"The question now is where this ongoing conflict will lead. Should this conflict escalate, its economic repercussions will be immense. The current economic state is notably weaker than in the past, and the global scenario is far from favourable."

He emphasised the urgent need for a resolution, and underscored the importance of political parties in achieving it. He cautioned that if political parties fail to address the situation, the country as a whole, its economy, and its citizens will suffer the consequences.