Macroeconomic recovery for whom?

Fitch, the US-based global credit-rating agency, forecasts a good tiding for Bangladesh economy provided that the government pursues reform. The uncertainty arising out of the political changeover over the economy, the agency maintains, is likely to be short-lived and the country's mid-term macroeconomic outlook is positive. However, the rating agency duly recognises the adverse effects of the shockwaves of the violent movement that toppled the immediate past government. Thus it has downgraded the country's output growth from its earlier projected 5.3 per cent to 4.5 per cent following identical slashing of growth projection by the International Monetary Fund (IMF) from 6.6 per cent for the fiscal year 2024-25. The other Bretton Woods Institution, the World Bank, also revised the growth projection downward to 4.0 per cent last week. The rating agency, however, sees an economic recovery in 2026 when the country may witness an economic upturn riding on a 5.7 GDP growth rate.
This recovery is, however, conditional. If external metrics like that of remittance sent by workers abroad remain stable, only then can it experience a turnaround. Improved macroeconomic performance alone cannot guarantee a country's social progress because much depends on how the national wealth is created and distributed. Under oligarchy, plutocracy or kleptocracy, outsize wealth may be created depriving the majority of its benefits. International agencies may wax eloquent about developments of any such order but outrageous socio-economic inequality marked by abject poverty for a hapless segment of society can negate the macroeconomic success. As many as 41.7 million people in Bangladesh now live in extreme poverty, according to a report titled "2024 Global Multidimensional Poverty Index released jointly by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative of the Oxford University. Of them 6.5 per cent are particularly vulnerable to food insecurity.
Right now, inflation has been raging after a slight lull in the previous month. Earlier, disruption of the supply chain was thought to be responsible for the latest soaring inflation but it has proved wrong. Although the World Bank projects an easing of inflation to 9.0 per cent in the fiscal 2025, signs are to the contrary. Market manipulation and exchange of several hands all along the supply chain before agricultural produce and other commodities reach the consumers have now been blamed for abnormal price escalation. The low-income segments in society are increasingly becoming disillusioned with the administrative measures because they read in the anti-discrimination movement some relief was on their way. Many of the lower classes also felt prompted to join the movement with hope for better days. Now they are utterly disappointed.
The year 2026, when Bangladesh economy is expected to recover reasonably and create employment opportunities, is a long way off for the poor and the marginal and even the lower-middle class people. Their urgency is so pressing that any further wait for brighter economic prospects proves very painful. Yet another round of price rise of essentials including rice of late makes matters worse for them. It would be prudent to focus on microeconomic resurgence. The sector of small and medium enterprises (SMEs) has failed to avail of the stimulus packages meant for industrial recovery in post-pandemic period mostly because of a lack of collateral. If appropriate policies are formulated and effective monitoring along with support for marketing products of such enterprises is put in place, economy at the grassroots level can buoy up and create employment opportunities.