Hopes, challenges intermingle as New Year dawns

Hopes and challenges intermingle in an ambiance as people at home and across the globe ring in 2024 as the New Year dawns under drawn-out shadows of geopolitical and economic volatility.
The advent of 2024 AD is preceded by one of the most difficult periods for Bangladesh principally for steep inflation that made daily necessaries, in particular, nearly unaffordable for limited-income people.
Yet, people are pinning hopes on the New Year for an economic turnaround  even though there are many challenges in sight-on economic as well as political fronts.
The main challenges for the economy in 2024, beginning today (Monday), are stabilizing volatile foreign-exchange market, propping up depleting forex reserves, easing the inflationary pressures, raising revenue receipts, instilling confidence in the capital market and raising turnover, and conducting reforms in the financial sector.
"We're dubious over conducting reform in the financial sector after the election by Bangladesh Bank," says Dr Ahsan H. Mansur, executive director of the Policy Research Institute of Bangladesh or PRI, a private think-tank.
He also says once the United States imposes any sanctions, that will be devastating for the economy as it will impact remittances and export receivables.
The economist forecasts that the inflationary pressure will remain in 2024 as the exchange-rate volatility will remain.
"Exchange-rate volatility is a major challenge as the country's local currency remained overvalued."
He thinks that the interest rate should go up in order to stabilize the exchange rate.
"We cannot contain inflation without stabilizing the exchange rate," Dr Mansur says, adding: "We need a realistic policy to contain the inflation."
The higher inflation hit hard the people in 2023 and prices of almost all key essential items had soared significantly, sans valid reasons in economists' view.
Domestic output, ranging from agriculture to manufacturing, showed upturn in 2023.
Dr Zahid Hussain, former lead economist of the World Bank, appears upbeat about a better luck this year provided right policies are in place to navigate the headwinds that may blow in.
"There are many hopes in the new year but it depends on how we are taking measures to combat the challenges," he told The Financial Express.
He predicts that lower remittance inflow, reserves volatility, and inflationary pressures may stay, as the shadows of turf and trade wars and conflicts draw out.
On the economic positives on the home front, he mentions that Aman paddy production was good and winter crops were also plentiful, which might lead to a fall in the prices of vegetables and cereals in early 2024 and help contain the food inflation in early months of 2024.
He sees a cause for concern on the financial front. "If the capital flight continues, the financial sector may weaken in the new year."
There is no action so far relating to non-performing loans and scams in the financial sector. He suggests the government and the policymakers should care about the inflationary pressure as the top priority as the poor suffer much.
Dr M. Masrur Reaz, chairman and CEO of Policy Exchange of Bangladesh, says 2024 will be the year for stabilizing the macroeconomic situation which remained unstable in 2023.
He feels that growth should be a secondary priority in that direction.
He foresees a ray of hope for export trade as the European market and the US markets may see recovery after higher inflation over there.
And remittance may be bullish once the central bank takes measures on how to stop the speculation on the forex market.
"I don't see any immediate remedy for the inflationary pains," Dr Masrur told this writer.
He mentions the compression of import and supply-chain disruptions on the domestic market as the main factors fueling inflation.
He has stressed the need for conducting reforms in the financial sector in early 2024 for a fillip to the economy.
"I think there is a need for bold step and political will to conduct reforms in the financial sector for bringing in good governance there."
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