Balance of payment may be affected by the end of June
FE Report | Thursday, 26 February 2009
The current healthy state of the country's balance of payment is likely to be squeezed by the end of June this year if the global economic recession continues to detriment the country's export earnings, Bangladesh Bank Governor Salehuddin Ahmed has cautioned.
"Although, the financial sector is still unscathed by the global economic recession, the real sector has slightly been nudged by the ongoing crisis and its underpinning effect is coming from the late decline in the growth of export earning," he said at a seminar titled "Global Financial Crisis: Regulatory Challenges for Bangladesh" in the city Tuesday.
Executive MBA Forum of North South University organized the event.
According to the statistics of the Export Promotion Bureau (EPB), the country's export earning in December 2008 dropped by over 10 percent due to declining demand and prices in global markets, and there has especially been a negative impact on the export of jute, jute goods, knitwear and woven clothing, frozen food and others.
Nevertheless, the country's current account balance, according to the central bank's 'Major Economic Indicators: Monthly Update-February, 2009' published Monday, recorded a surplus of $232 million during July-December, 2008, much of which the central bank Governor credited to the increased flow of remittances and foreign direct investment.
"Conversely, despite being vulnerable to current recession, the flow of remittance and foreign direct investment into the country has increased in the last quarter which is rather a good sign, but the waning export growth is a major worry for us," the BB Governor said.
The country received $5.369 billion as remittances during the July-January period of FY 09 against $4.151 billion of the corresponding period of the previous fiscal and the flow of net foreign direct investment (FDI) rose to $706 million during the period from $285 million of the corresponding period of the previous fiscal.
However, expressing an optimistic view about the country's economic outlook amid the global crisis, Salehuddin Ahmed stressed on creating 'fiscal space' in the government budget to insulate the more vulnerable segment of the economy.
"This means to provide government leverage to some specific vulnerable sectors under the current circumstances, in a bid to insulate them from the overseas downturn," he explained.
"Apparently, there is no need for an blanket economy-wide stimulus; rather some specific sectors, especially which are affected or is in the helm of being affected by the global downturn need to be addressed," the BB Governor opined.
Stating that there is no way for Bangladesh to be complacent, the central bank Governor put thrust on stimulating the various 'indigenous' sectors in a bid to remain unscathed.
"Especially, the domestic agriculture and the SME sector must be geared up in a bid to shield the local economy from the recession," Salehuddin said.
Nevertheless, expressing a skeptical view about idea of the depreciation of Taka against the US Dollar, the central bank Governor affirmed that devaluation of the local currency, which is performing stably, might not turn out to be a good thing for the country's economy.
Simultaneously he expressed his hope that the ongoing attempt of export diversification can, in the long term, retain the country's export basket healthy.
Earlier, speakers in the seminar focused on the background and extent of the global economic crisis and presented various policy recommendations to save the country's economy from the ongoing recession.
Chief Executive Officer of Bangladesh Foreign Trade Institute (BFTI) M A Taslim, who presented the keynote speech, stressed on some stimulus for industries catering both domestic as well as export market and also urged the central bank to have a look at its monetary policy.
Citibank Country Director Mamun Rashid, who attended the seminar as a discussant, emphasized on more investment in infrastructure and the creation of credit to keep the economy stimulating.
Blaming the current crisis on the profit hungry attitude of the big names in the global financial sector, speakers in the seminar put thrust on adapting a culture, which first of all serve the client's needs.
Vice Chancellor of NSU Hafiz G A Siddiqi, Dean of the School of Business Amirul Islam Chowdhury and Dean of School of Arts and Social Science M A Rashid also spoke on the occasion.
"Although, the financial sector is still unscathed by the global economic recession, the real sector has slightly been nudged by the ongoing crisis and its underpinning effect is coming from the late decline in the growth of export earning," he said at a seminar titled "Global Financial Crisis: Regulatory Challenges for Bangladesh" in the city Tuesday.
Executive MBA Forum of North South University organized the event.
According to the statistics of the Export Promotion Bureau (EPB), the country's export earning in December 2008 dropped by over 10 percent due to declining demand and prices in global markets, and there has especially been a negative impact on the export of jute, jute goods, knitwear and woven clothing, frozen food and others.
Nevertheless, the country's current account balance, according to the central bank's 'Major Economic Indicators: Monthly Update-February, 2009' published Monday, recorded a surplus of $232 million during July-December, 2008, much of which the central bank Governor credited to the increased flow of remittances and foreign direct investment.
"Conversely, despite being vulnerable to current recession, the flow of remittance and foreign direct investment into the country has increased in the last quarter which is rather a good sign, but the waning export growth is a major worry for us," the BB Governor said.
The country received $5.369 billion as remittances during the July-January period of FY 09 against $4.151 billion of the corresponding period of the previous fiscal and the flow of net foreign direct investment (FDI) rose to $706 million during the period from $285 million of the corresponding period of the previous fiscal.
However, expressing an optimistic view about the country's economic outlook amid the global crisis, Salehuddin Ahmed stressed on creating 'fiscal space' in the government budget to insulate the more vulnerable segment of the economy.
"This means to provide government leverage to some specific vulnerable sectors under the current circumstances, in a bid to insulate them from the overseas downturn," he explained.
"Apparently, there is no need for an blanket economy-wide stimulus; rather some specific sectors, especially which are affected or is in the helm of being affected by the global downturn need to be addressed," the BB Governor opined.
Stating that there is no way for Bangladesh to be complacent, the central bank Governor put thrust on stimulating the various 'indigenous' sectors in a bid to remain unscathed.
"Especially, the domestic agriculture and the SME sector must be geared up in a bid to shield the local economy from the recession," Salehuddin said.
Nevertheless, expressing a skeptical view about idea of the depreciation of Taka against the US Dollar, the central bank Governor affirmed that devaluation of the local currency, which is performing stably, might not turn out to be a good thing for the country's economy.
Simultaneously he expressed his hope that the ongoing attempt of export diversification can, in the long term, retain the country's export basket healthy.
Earlier, speakers in the seminar focused on the background and extent of the global economic crisis and presented various policy recommendations to save the country's economy from the ongoing recession.
Chief Executive Officer of Bangladesh Foreign Trade Institute (BFTI) M A Taslim, who presented the keynote speech, stressed on some stimulus for industries catering both domestic as well as export market and also urged the central bank to have a look at its monetary policy.
Citibank Country Director Mamun Rashid, who attended the seminar as a discussant, emphasized on more investment in infrastructure and the creation of credit to keep the economy stimulating.
Blaming the current crisis on the profit hungry attitude of the big names in the global financial sector, speakers in the seminar put thrust on adapting a culture, which first of all serve the client's needs.
Vice Chancellor of NSU Hafiz G A Siddiqi, Dean of the School of Business Amirul Islam Chowdhury and Dean of School of Arts and Social Science M A Rashid also spoke on the occasion.