Meltdown likely to affect remittances from abroad

FE Team | Published: November 24, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
The on-going global economic crisis is likely to affect the remittances to Bangladesh from abroad as overseas employment opportunities are likely to decrease in the wake of worldwide recession, a World Bank report forecast on Monday.
About 63 percent of the remittances come to Bangladesh from the Middle-East countries where the construction industry is likely to take a downturn because of the global economic slowdown.
The World Bank report on "Poverty Assessment for Bangladesh: Creating Opportunities and Bridging the East-West Divide" was released in the capital.
The report said, despite a series of shocks as a result of global recession, Bangladesh has progressed significantly in poverty alleviation over the last ten years. However, it will be hard for Bangladesh to achieve the Millennium Development Goal (MDG) by reducing poverty if the global economic recession continues. After all, Bangladesh is expected to achieve the MDG of halving the proportion of people living in poverty by 2015 if current growth rates are maintained, along with continued reduction in fertility.
About the country's progress in reducing poverty in recent years, the report said, Bangladesh compares well with South Asian countries in this respect but it lags behind East Asia. Bangladesh 's success in achieving the goal of poverty reduction will, however, depend on remittance inflow and exports earnings and, on how the country is going to overcome probable internal and external shocks, the report observed.
Despite mentionable growth in recent years, the western part of the country lags behind the eastern part in poverty reduction. The rivers Jamuna and the Padma have created natural boundaries that have resulted in two economically unequal geographical regions in the country. The poverty rate was 32 percent in Dhaka division and 34 percent in Chittagong and Sylhet, and more than 45 percent in the Western divisions of Khulna, Barisal and Rajshahi in 2005. The rapid growth of international remittances helped to reduce poverty but reinforced the regional inequality pattern. For example, 24 percent of households in Chittagong division and 16 percent in Sylhet received remittances, compared to less than 5.0 percent in Rajshahi, Khulna, and Barisal divisions, the report mentioned.
Responding to a question, Xian Zhu, Country Director, World Bank, Bangladesh, said, 'Poverty reduction is not only improving household incomes but also enhancing human capability. It is encouraging to see that Bangladesh is on track to attain most of the MDGs. Still malnutrition remains unacceptably high, which may have been worsened by the recent food price hike. To protect the vulnerable, the existing safety net programs needs to be more coordinated, like the recent reform in the Philippines to set up a central coordinating body.'
Answering another question, he said, "We are not sure as to why disparity exists between the east and west part of Bangladesh. The Padma Bridge is essential for lessening economic distance between the two regions as it would improve connectivity, market access and migration."
The Poverty Assessment Study finds that the existing safety net programs are inadequate even after the progressive expansion in the safety net budget. Less than a quarter of the poorest 10 percent of the population are recipients of at least one safety net program. Moreover resources can be targeted better. For example, in spite of its low poverty rate, Sylhet has the highest safety net coverage among its population.
Due to a sharp increase in the number of people entering the job market, around 2.2 million new jobs will need to be created per year over the next decade - this is twice the rate of job created between 2000-05. This is both a challenge for Bangladesh and also an opportunity since the new income earners can contribute significantly to overall poverty reduction.