Higher commodity prices cost 7.7pc of GDP in 5 yrsShakhawat Hossain
Sunday, 23 November 2008
The country, on average, suffered a financial loss of more than 1.5 per cent annually in terms of its gross domestic product (GDP) during the last five years due external trade shock originating from higher fuel and food prices.
"Between January 2003 and May 2008, the cumulative loss was 7.7 per cent of GDP due to severe terms of trade shock mainly originating from higher food and petroleum prices," according to the WB report which was quoted by the Bangladesh Bank (BB) in its recent policy paper on global financial meltdown.
Since early 2003 oil prices quadrupled and food prices doubled in the international market. A barrel oil price was traded in at US$29.44 in January 2003 which soared to $117.40 May last.
The BB report said steep hike in food prices ate up 3.1 per cent and energy 2.6 per cent of the country's GDP during the period.
The country spent $ 3.1 billion to foot the country's fuel import bill in 2007-08 fiscal ending June last. The bill was, however, at least $1.0 billion less in 2006-07.
The country had to spend more than $850 million for procuring rice in the fiscal 2007-08 against the shortfall of the staple in the domestic market.
The trade shocks triggered a balance of payment crisis for the country as it took loan worth $218 million from International Monetary Fund May last.
The central bank report, however, said the intensity of trade shock was less as far as Bangladesh was concerned. It was more in case of other South Asian countries, namely India, Pakistan and Sri Lanka.
The total loss was 9.5 per cent of GDP for India, 11.3 per cent for Pakistan, and 10.2 per cent for Sri Lanka.
Bangladesh managed to keep the loss within at 7.7 per cent, thanks to robust growth in export and healthy inflow of remittance.
"This loss of income, however, was largely met by growth in remittances," said the central bank report.
The country's export and remittance are maintaining nearly 15 per cent and nearly 30 per cent growth respectively.
The central bank report said the easing of the adverse external environment emanating from global price developments has been clouded by the present global financial crisis. The crisis has given rise to some downside risks to the country's economy, it said.
"The potential channels of transmission of these risks are multiple," it said.
The financial risks include the lower foreign capital inflows including that of foreign aid.
In addition, a number of risks to the real sector emanating from global slowdown in growth include adverse effect on exports, possible downward pressure on remittances, and slowdown of investments and growth, added the report.
"Between January 2003 and May 2008, the cumulative loss was 7.7 per cent of GDP due to severe terms of trade shock mainly originating from higher food and petroleum prices," according to the WB report which was quoted by the Bangladesh Bank (BB) in its recent policy paper on global financial meltdown.
Since early 2003 oil prices quadrupled and food prices doubled in the international market. A barrel oil price was traded in at US$29.44 in January 2003 which soared to $117.40 May last.
The BB report said steep hike in food prices ate up 3.1 per cent and energy 2.6 per cent of the country's GDP during the period.
The country spent $ 3.1 billion to foot the country's fuel import bill in 2007-08 fiscal ending June last. The bill was, however, at least $1.0 billion less in 2006-07.
The country had to spend more than $850 million for procuring rice in the fiscal 2007-08 against the shortfall of the staple in the domestic market.
The trade shocks triggered a balance of payment crisis for the country as it took loan worth $218 million from International Monetary Fund May last.
The central bank report, however, said the intensity of trade shock was less as far as Bangladesh was concerned. It was more in case of other South Asian countries, namely India, Pakistan and Sri Lanka.
The total loss was 9.5 per cent of GDP for India, 11.3 per cent for Pakistan, and 10.2 per cent for Sri Lanka.
Bangladesh managed to keep the loss within at 7.7 per cent, thanks to robust growth in export and healthy inflow of remittance.
"This loss of income, however, was largely met by growth in remittances," said the central bank report.
The country's export and remittance are maintaining nearly 15 per cent and nearly 30 per cent growth respectively.
The central bank report said the easing of the adverse external environment emanating from global price developments has been clouded by the present global financial crisis. The crisis has given rise to some downside risks to the country's economy, it said.
"The potential channels of transmission of these risks are multiple," it said.
The financial risks include the lower foreign capital inflows including that of foreign aid.
In addition, a number of risks to the real sector emanating from global slowdown in growth include adverse effect on exports, possible downward pressure on remittances, and slowdown of investments and growth, added the report.