There are some economists that are questioning GDP growth numbers in the wake of key indices showing downward trends barring remittances. The biggest questions centre on the inability to meet targeted revenue collections, the increasing non-performing loans and that government borrowing from banks has almost reached its projected numbers with nearly half of the fiscal remaining. They point to the resultant squeeze this will have on credit available for businesses even though loan disbursements are down. Banks and financial institutions are now literally knocking on the individuals' doors seeking fresh deposits. The hapless individual hit by the abnormal rise in prices of essentials isn't responding to these overtures with cost of living eating into savings.
According to some media reports, manufacturing concerns are seeing a slowdown in consumer offtake. Those that continue to make profits are seeing numbers fall compared to the previous year and put it down to less disposable income. Ministers have gone public in saying the rising costs aren't a cause of concern for consumers as their purchasing power has increased. While this may be true so is the fact that cost of living has increased thereby reducing the benefits of more disposable income.
On a macro level, the slowdown in garments export has finally led to Bangladesh quietly devaluing the Taka against the dollar to make exports more competitive. Apart from the fact that this will make imports more costly, it doesn't address the geo-political issue of the US-China trade war benefits being channelled to Vietnam and other countries rather than, as had been expected, Bangladesh. For some time economists and think-tanks have emphasised the need to focus on other export items. As the global economy stutters, especially the main export destination European Union, it was just a matter of time before multiple buying of garments in those countries reduced. The devaluation of the currency is just one of the steps required for a fillip to exports. Strong intervention with buyers was required to ensure stable pricing and that has not happened. The garments manufacturers have also complained about salary hikes forced on them and now have on record more than 500 units having been shut down leading to over 50,000 job losses. Ambitious export targets have been set but with more automation being forced on manufacturers there will be a net loss of jobs even after employment of more skilled workforce adept in the automated changes.
Non-performing loans have contributed to capital flight while lower than expected revenue collections have further depleted cash reserves. Unless the government scales down the Annual Development Plan, there may be a shortfall of cash available even for the mega projects.
During the global meltdown Australia's government actually disbursed sops encouraging its citizenry to spend. That money came from reserves. While our reserves are healthy based on the number of months' imports that can be financed, it is nowhere as robust. Nonetheless, some form of support is required to encourage individual spending, if manufacturing concerns are to remain vibrant. Quicker disposal of the in-numerous revenue cases that are pending in the courts may release some funds but as in the case with the telecommunication companies, such outcomes may have a negative bearing on further investment that is required for both modernisation as well as providing services to consumers. It's not a nice option but it looks increasingly as if frugality in government spend will become a required necessity.
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