Economy reels from gloom in outgoing yr

Hope against hope for a better luck is cherished as the economy reels from setbacks as 2024 dawns in world chronicles with shadows of war and trade sanctions hanging over.
By all accounts, 2023 has been quite a gloomy year in terms of many economic indicators that people of Bangladesh, as elsewhere around the globe, are passing through while about to bid it farewell this midnight (Sunday).
People and policymakers, however, hold hope for the better in the coming year 2024, though concern persists  over political uncertainty centring around the general election to be held on January 07 and high inflation.
The economic trend that persists throughout the year -- macroeconomic instability -- was much talked about in 2023.

The fastest depleting foreign- exchange reserves and foreign- currency market volatility have impacted all people in general and businesses in particular.
The loan support from the IMF and other multilateral agencies gave a little relief as, at the end of year, Bangladesh Bank achieved its target for retaining the forex reserves set by the IMF as a conditionality for loan disbursement.
The scourge of higher inflation that peaked over 12 per cent (food inflation) erodes the real wealth of people and its pain is felt everywhere-the poor and the rich.
Food-price inflation -from potato to onion - has surged significantly.
War in Europe and supply-chain chaos together triggered the highest inflation and most aggressive interest-rate-raising cycle in decades in the world.
But Bangladesh is just the opposite as the rate of inflation and the prices of key essential goods have skyrocketed as high as never seen before, and most importantly, there is no reason for rising the prices of essentials at the retail level.
Investment from the private sector hit rock bottom and the capital market remained bearish almost the whole year, now running out.
In the wake of higher inflation and less-than-expected investment, the government has revised down its economic-growth projection to 6.5 per cent for the fiscal year 2024.
Fears of US visa policy and its enforcement-much talked about in 2023, both on political and economic fronts- have faded at the end of the year but another fear of a possible trade embargo panicked many.
The central bank of Bangladesh reformed affairs in many areas, including interest rates. It withdrew the lowest ceiling on deposit and lending rates based on SMART benchmark.
Bangladesh Bank's other important decision was halting the printing of money, called in banking terms 'devolvement'.
However, in the outgoing calendar year, Bangladesh's three megaprojects-Ctg Bangabandhu tunnel, and Dhaka's metro-rail opening-were a piece of good news to rejoice in.
Dr Ahsan H. Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), feels inflation hit hard people in 2023.
"The pressure of the volatile forex market will continue in 2024."
Dr Zahid Hussain, an independent economist, told the FE the nonperforming loans in the banking industry increased despite the forbearance facilities to some selected people.
He notes that the banking industry fund shortage, especially for the Shariah-based banks, continued until the last day of the year.
He forecasts: "If the capital flight continues, the forex market may get more volatile."
Dr Hussain says agricultural sector was cheery as production of Boro and Aman was good and expected to yield bumper production-Aman in 2023.
He also finds electricity consumption and generation as a good sign for the economy in 2023.
"The financial sector may further weaken in the new year as there is no action so far relating to non-performing loans and scams in the financial sector," the economist concludes on a note of alert.
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