FY16 starts with strong trend in major economic indicators

The new financial year has began amid strong trend in major economic indicators, raising the prospect of achieving higher growth and more economic stability in the coming days. The key economic indicators, including per capita income, remittance earnings, foreign currency reserve, inflation, export earnings, import and exchange rates maintained healthy trend at the very beginning of fiscal year 2015-2016 (FY16) that started on July 1. The Gross National Income (GNI) per capita registered a phenomenal rise, reaching at $1,314 at the end of June, prompting the World Bank (WB) upgrade Bangladesh’s status from low income group to lower-middle income status. Following the WB’s disclosure on Wednesday, Prime Minister Sheikh Hasina said the country made the significant economic progress over the last few years amidst many obstacles, including political disturbances and heinous conspiracy to thwart the pace of development. The WB's disclosure was followed by another prestigious upgradation in ranking by the Organisation for Economic Co-operation and Development (OECD). The OECD upgraded Bangladesh’s country risk classification from six to five. The risk classification refers to a country's ability to transfer currency for foreign payments. This ability is determined by three main factors: political, economic and financial factors. The risk classification is used to define the minimum premium for credit risk in each country.

The major reason for upgradation from country category 6 to 5 is the resilience of Bangladesh economy accompanied by high and stable economic growth for well over a decade despite political upheaval and weak external demand. The two major achievements in the economic front were strongly supported by another disclosure by the Bangladesh Bank (BB) that the country's remittance earning for the first time crossed $15 billion mark, with an annual 7.5 per cent increase. The remittance inflow showed phenomenal increasing trend as a result of the government initiatives to resume and increase manpower export to major Arabian countries including Saudi Arabia and the United Arab Emirate (UAE).

At the initiative of Prime Minister Sheikh Hasina, Saudi Arabia in February last lifted the ban on change of Iqama (work permit) for switching jobs. Bangladeshi workers were not allowed to change their work-permit in the past six years since 2008. In April this year the Saudi Ministry of Labor also resumed issuing visas for Bangladeshi domestic workers. During the visit of Sheikh Hasina, UAE also signed a deal for recruiting between 1,000 and 2,000 female household workers a month from Bangladesh.

BB official hoped that the remittance would increase further in the coming days, with more workers would be going overseas and sending home more money. The country's foreign exchange reserve at end of June hit $25 billion mark for the first time, with attaining a phenomenal rise in the past one year. A major concern of the economy, inflation, was as low as 6.19 per cent in May, which was below the targeted 6.20 per cent for the current financial year. The revenue earning exceeded the target in the just concluded financial year. The National Board of Revenue (NBR) last week announced that it collected Tk1.362 billion (Tk 1 lakh 36 thousand 267 crore), which was higher by Tk12.39b (Tk1,239 crore) from the targeted revenue receipt. The country's export also marked rise in the recent months despite some ups and downs in the major economies.

 According to the Export Promotion Bureau (EPB), the export earnings reached $28.41 million in May. The strength in the key major economic indicators drew attention of global financial orgnisations. The UK-based banking giant HSBC in its latest Global Connections Trade Forecast Report said that Bangladesh would post strong economic growth and see a bullish trend in exports up to 2030.

The rating agency Moody's lauded the recent revenue reforms made by the government and predicted a stable outlook for the new fiscal year, according to BSS.