Political volatility impacts economy

The concluding days of the last year and the opening month of the current one could be considered among the most disturbing times for Bangladesh in terms of domestic political scenario. The period has been witnessing hartal (stoppage), 'blockade', etc. almost at a stretch, accompanied by deadly violence. As a result, the economy has been made to bear the brunt in many ways.
There was a hartal on the last day of 2014, and again on the first day of 2015. This has been followed by a political face-off and sporadic clashes that covered the entire first week of January. It resulted in transports going off the roads and parts of the country losing their connectivity with Dhaka and Chittagong. This return of political unrest has affected normal trade, commerce and economic activities.

The pot is on the boil again. After a year of relative calm, political rivalry and violence have encroached on our daily lives once again. Apart from deaths and injuries, all this has sparked arson, police action and destruction of private properties. In general, the common people are suffering. They are falling victims to violence and feeling insecure. The media --- electronic and print --- is found busy covering the deteriorating situation, almost a repeat of what occurred in 2013.
According to media reports, the continuing blockade and hartal programmes have already started to adversely affect the export sector. Many of the foreign buyers have cancelled their scheduled trips to Bangladesh. Fearing a prolonged political crisis, the buyers are showing a cautious attitude while putting orders. The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) sources are saying that it would be quite difficult to achieve the export goal in the current fiscal year (FY) of 2014-15. A series of general strikes (hartals) and 'blockades' will inevitably hamper the country's export-oriented sectors and also send a negative image abroad.
The industrial sector has been affected immensely as the products could not be distributed across the country. The exporters are transporting their products with much difficulty, not only at higher transport costs but also at high risks of having them burnt during the violence. According to BGMEA, Tk 4.50 billion (450 crore) has so far been spent additionally for price discounts, shipment by air and, of course, due to order cancellation. Though apparel exports are still showing high performance, buyers of RMG products have alerted Bangladeshi manufacturers about the possibility of shifting their orders from Bangladesh to other sources such as Cambodia, Vietnam, and even India if the political violence continues. Any such move will mean unemployment for a large number of workers, who will create pressure on the already buffeted economy in terms of employment generation. This will also create social problems as majority of the RMG workers are women, who have been empowered through economic independence by way of working in the RMG sector.
In short, the apparel and other sectors are facing a great challenge in the long-drawn-out blockade programme called by the opposition parties. According to the shop owners' association, on every single day they are incurring losses of Tk 1.5 billion (150 core). The price of daily commodities has seen a considerable hike, and the masses have begun feeling afflicted.
About 60 thousand buses and minibuses move across the country every day. Due to a hartal or a blockade programme, a loss of about Tk 480 million (48 core) is incurred a day.
The agricultural sector is passing through a critical time due to the indefinite blockade programme. Amid violent picketing, agricultural products cannot be sent from villages to the capital and other urban markets. Lately, there has been a scarcity of vegetables and other food items in the urban areas due to supply disruptions.  It is evident that political unrest has contributed to the creation of this situation. Prolonged political crisis could only make the situation worse.
An entrepreneur invests on the basis of expected profitability. While taking a decision whether to invest or not, one not only evaluates the situation of a given time, but also tries to guess how things are likely to turn out in the days ahead.
Hartal and blockade programmes are the outcome of confrontational politics. This type of politics cannot ensure a stable and robust economic environment for a country; rather it indicates an uncertain future.
Political and business uncertainty is a bitter enemy of investment. That is why hartal and blockade programmes make potential local and foreign investors edgy. In a politically volatile situation, the investors want to stay away from investing until their confidence about the future is restored. Therefore, in estimating the economic costs of hartal and blockade programmes, one should not just point out how many buses and trucks had stayed away from the road, how many of them were burnt and how much production was disrupted, but also the volume of investment lost and how many machines remained out of operation. Bangladesh with its resource constraints depends for its economic well-being to a large extent on the export sector as well as attracting foreign direct investment. Political disturbances are bound to result in economic slowdown. That is a grim situation no sane person in the country would accept.
Politicians from both sides, those who are calling a blockade and those who are trying to stop it, should work out pragmatic solutions to the present crisis. Those in the government and in the opposition should concentrate on a politics which is based on the present global realities. It is high time we stopped wasting time. Or else, our aspiration to become a middle-income country by 2021 will remain elusive.

The writer is a post-graduate student of Economics at Jahangirnagar University. [email protected]