For addressing problems related to global recession
Saturday, 13 December 2008
There are many projections now making the rounds about the depth and duration of the recession which appears to be gripping most of the developed countries in varying degrees. However a common view is noted in such analysis that that there would not be a quick recovery from the recession. It is highly expected to linger on for some years and, in that case, Bangladesh and other countries with similar economic status or conditions, have reasons to take hard preparations of their own to be not so much affected by the recession now being experienced by their development and trading partners.
Some observers and analysts have been saying ever since the signs of a recession started emerging in the developed countries, that the same would cause hardly any problem for Bangladesh as its economy has insignificant external linkages and because its main export item, readymade apparels, is lower priced satisfying demands of common people whose demand for the same are inelastic. But now with the recession deepening and appearing to be a long standing phenomenon, this theory of cheap Bangladeshi products and their demand inelasticity among users in the developed countries, is starting to strain. Experts in the country appear to have been sensitized by media reports about how ordinary Americans are shining their own shoes, not giving up wearing their old shirts for new ones and cobblers there having a heyday from people tending to get their shoes repaired for use than buying new pairs. The habit change in the face of falling income, suggests that the appeal of cheap products from Bangladesh would also eventually fail to persuade consumers in developed countries as they feel the worst pinches of the recession.
Thus, the export oriented industries of Bangladesh may not go on weathering the global economic storm so easily. At a point of time in the future, Bangladesh, too, could face the earlier anticipated effects of the economic downturn in the developed countries. Even bilateral and multilateral aid to Bangladesh may reduce substantially as the donor countries face tougher times. The remittance received by Bangladesh from developed countries could also decline from lower income of Bangladeshi expatriates. With the booming economies of the Middle Eastern countries changing colours from the fast dropping prices of fuel oils, job opportunities for Bangladeshi workers in their most prospective area could also be squeezed.
All of these adverse developments are now only visualized and may not happen or could happen only partly so as to leave the Bangladesh economy relatively unscathed. Nonetheless, risks must not be taken. It is always best to be expertly watchful to avoid any pitfalls from a lack of timely action and planning. Thus, the suggestion from one of the country's leading thinktanks that it may form a task force and provide secretarial service to it, to produce urgent recommendation for the new elected government on the ways and means of coping with the fallouts of the global economic crisis, makes some strong sense. The new government will need time to take stock of the international economic situation before deciding on a response or strategy. But its tasks will become much the easier in this respect if it gets useful, ready and competent advice to this end from the relevant experts.
The organisation which is taking this initiative, has proposed to form this task force and do its work in collaboration with the main chamber bodies of the country, independent economists and other reputed research organisations; its policy suggestions are likely to be a ready source of sound advice for the new government. Therefore, the formation of such a task force needs to be only enthusiastically welcomed and its recommendations should be well received and given serious consideration by the government while making and executing policies.
Some observers and analysts have been saying ever since the signs of a recession started emerging in the developed countries, that the same would cause hardly any problem for Bangladesh as its economy has insignificant external linkages and because its main export item, readymade apparels, is lower priced satisfying demands of common people whose demand for the same are inelastic. But now with the recession deepening and appearing to be a long standing phenomenon, this theory of cheap Bangladeshi products and their demand inelasticity among users in the developed countries, is starting to strain. Experts in the country appear to have been sensitized by media reports about how ordinary Americans are shining their own shoes, not giving up wearing their old shirts for new ones and cobblers there having a heyday from people tending to get their shoes repaired for use than buying new pairs. The habit change in the face of falling income, suggests that the appeal of cheap products from Bangladesh would also eventually fail to persuade consumers in developed countries as they feel the worst pinches of the recession.
Thus, the export oriented industries of Bangladesh may not go on weathering the global economic storm so easily. At a point of time in the future, Bangladesh, too, could face the earlier anticipated effects of the economic downturn in the developed countries. Even bilateral and multilateral aid to Bangladesh may reduce substantially as the donor countries face tougher times. The remittance received by Bangladesh from developed countries could also decline from lower income of Bangladeshi expatriates. With the booming economies of the Middle Eastern countries changing colours from the fast dropping prices of fuel oils, job opportunities for Bangladeshi workers in their most prospective area could also be squeezed.
All of these adverse developments are now only visualized and may not happen or could happen only partly so as to leave the Bangladesh economy relatively unscathed. Nonetheless, risks must not be taken. It is always best to be expertly watchful to avoid any pitfalls from a lack of timely action and planning. Thus, the suggestion from one of the country's leading thinktanks that it may form a task force and provide secretarial service to it, to produce urgent recommendation for the new elected government on the ways and means of coping with the fallouts of the global economic crisis, makes some strong sense. The new government will need time to take stock of the international economic situation before deciding on a response or strategy. But its tasks will become much the easier in this respect if it gets useful, ready and competent advice to this end from the relevant experts.
The organisation which is taking this initiative, has proposed to form this task force and do its work in collaboration with the main chamber bodies of the country, independent economists and other reputed research organisations; its policy suggestions are likely to be a ready source of sound advice for the new government. Therefore, the formation of such a task force needs to be only enthusiastically welcomed and its recommendations should be well received and given serious consideration by the government while making and executing policies.