Majority macro-indicators of Bangladesh's economy signal significant challenges facing the new government that economists attribute to persisting global and local adversities as well as turbulent internal political transition.
As many as six out of nine key economic indicators prepared by the central bank deteriorated, as of December last, implying that they hold the potential to weaken the economy further.
The six weaker parameters are foreign-exchange reserves, import volume, domestic debt, export receipts, food stock, and CPI inflation.
The Bangladesh Bank prepares such update on the economy for the Ministry of Finance and other policymakers to act. This is an internal report, shared with the policymakers regularly.
The BB has prepared nine indicators under its jurisdiction: foreign-exchange reserves, remittance inflow, import volume, export receipts, revenue collection, total domestic debt, LC opening, food-grain stock, and CPI inflation.
According to the BB's economic-assessment report, a copy of which is obtained by The Financial Express, the forex reserves dropped nearly 20 per cent in December 2023 over its corresponding period a year earlier. The reserves were recorded at US$27 billion during this period in traditional official matrix.
Measured in IMF arithmetic, however, the net reserves later fell to somewhere around $20 billion.
The import volume decreased 10.40 per cent to about $6.0 in October last, the report mentions in its October data, with domino effect of the fall on production and supply situations.
Bangladesh, believed an import-dependent economy, relies largely on imports for its export-oriented manufacturing sector and domestic consumption. The BB has tightened the import since middle of 2022, pursuant to government's belt-tightening measures to weather financial crunch.
Export receipts dropped more than 1.0 per cent to $5.3 billion in December 2023, as per the country's export-promotion bureau's data.
The balance of total domestic debt surged 12.2 per cent to Tk 19.6 trillion as of November. The October 2023 balance was recorded at Tk 19.4 trillion, according to the report, prepared at a time when there had been political turbulence over the just-past general election.
The food-grain stock in silos dropped over 15 per cent to 13.43 tonnes in November. In October the buffer stock was 16.04 tonnes
The CPI inflation rate increased to 9.49 per cent in a 3.5-percentage-point rise over the annual target on a point-to-point basis, the report has mentioned.
Economists view this as a matter of concern as the internal reports also show deterioration of the indicators, prompting them to call for priority action by the new administration just setting sail against such headwinds.
They suggest the policymakers should take it seriously as the economy has been navigating such a situation for more than one year.
Dr M Masrur Reaz, chairman and CEO of Policy Exchange of Bangladesh, says the new cabinet should take it seriously.
He notes that there were many measures undertaken over the last one or more years but that did not yield the expected level of outcome. "It should be urgently reviewed."
"The new cabinet should work on the matters and, if necessary, take painful steps in the interest of the economy," he told the FE.
He mentions that the signs have been tangible since June 2022 soon after the beginning of the war in Ukraine. The government should take as a top priority.
Dr Zahid Hussain, an independent economist of Bangladesh, alerts that buffer stock is very important as the traders may cash in on the deterioration in food stock.
"Dishonest traders and wholesalers ramp up the prices of the staples at a time when the stock shrinks fast," the former World Bank economist says, obviously in view of recent market waywardness.
Dr Hussain, however, strikes a note of optimism that there goes Aman collection and the stock may rise again.
However, there are three areas where the government has breathing spaec: remittance inflows which surged 17 per cent over its corresponding period a year earlier to $2.0 (nearly) billion, revenue mobilization rose about 14 per cent to Tk 283.5 billion in November last and letter-of-credit opening was showing a rise of about 13 per cent.
jasimharoon@yahoo.com
rezamumu@gmail.com