Riding the crunch
Wednesday, 1 April 2009
Mahmudur Rahman
Amidst all the negative news from the world economy now come some refreshingly positive signs. Two of the major players in the world economy report contrasting situations that give rise to hope.
China, predicted to be the major economic power-house of the future has announced that its fiscal packages have begun to take effect in that the economic slide has been halted. Side by side India, another future economic power-house, while grumbling over a lowering of its growth from double digit to 6.5%, has proven that it is resilient enough to partially ward off the effect of the global meltdown. Both China and India have however reported job losses and slowdowns and the numbers of unemployed are on the increase.
What a far cry from the situation of last year before the disagreeable economic malaise. China and India were basking in the glow of enviable growth rates, riding high on a surge fuelled by consumer spending. India depended a lot more on remittances and backed this up with exports whereas China, as ever was the export giant, depending largely on the developed economies. When the crunch came, India had the massive middle-class market to fall back on while China had to re-craft sales pitches to the much better-off local consumer.
Some of the figures are misleading. For example while private businesses ploughed in $ 30 billion in overseas business acquisitions, India still looked to the World Bank (WB) for $14 billion over 2009 and 2010 to fund infrastructural development. China, rebuffed by US legislator opposition to buying out an energy company quickly toned down the rhetoric and concentrated on spreading their wings in the African sub-continent. Both countries have enviable foreign exchange reserves. China is the envy of the developed world while India's the envy of the developing world.
India's burgeoning domestic market with a whole host of international brands now manufacturing out of the country, gives them the extra cushion and a far-sighted wooing of the expatriate Indian investment has given her the jump-start to a second cushion. This is where countries such as Bangladesh need to look at regional trading and even Asian markets to soften the blow of declining demand in the west. The fall in oil-prices has shown that weakening of demand can bring even the mighty Organisation of Petroleum Exporting Countries (Opec) down. And if people buy less than their usual quota of clothes, our garments sector needs to look at new markets quickly. For a change, this is where the trade commissions of the government can play the role of facilitator by creating the linkages required.
More thoughts for possible pondering by the special task force of the government. Speed is the essence of the day. (The writer is a Head of Corporate and Regulatory Affairs, British American Tobacco, Bangladesh and former chief Executive Officer of Bangladesh Cricket Board. He can be reached at e-mail: mahmudrahman@gmail.com)
Amidst all the negative news from the world economy now come some refreshingly positive signs. Two of the major players in the world economy report contrasting situations that give rise to hope.
China, predicted to be the major economic power-house of the future has announced that its fiscal packages have begun to take effect in that the economic slide has been halted. Side by side India, another future economic power-house, while grumbling over a lowering of its growth from double digit to 6.5%, has proven that it is resilient enough to partially ward off the effect of the global meltdown. Both China and India have however reported job losses and slowdowns and the numbers of unemployed are on the increase.
What a far cry from the situation of last year before the disagreeable economic malaise. China and India were basking in the glow of enviable growth rates, riding high on a surge fuelled by consumer spending. India depended a lot more on remittances and backed this up with exports whereas China, as ever was the export giant, depending largely on the developed economies. When the crunch came, India had the massive middle-class market to fall back on while China had to re-craft sales pitches to the much better-off local consumer.
Some of the figures are misleading. For example while private businesses ploughed in $ 30 billion in overseas business acquisitions, India still looked to the World Bank (WB) for $14 billion over 2009 and 2010 to fund infrastructural development. China, rebuffed by US legislator opposition to buying out an energy company quickly toned down the rhetoric and concentrated on spreading their wings in the African sub-continent. Both countries have enviable foreign exchange reserves. China is the envy of the developed world while India's the envy of the developing world.
India's burgeoning domestic market with a whole host of international brands now manufacturing out of the country, gives them the extra cushion and a far-sighted wooing of the expatriate Indian investment has given her the jump-start to a second cushion. This is where countries such as Bangladesh need to look at regional trading and even Asian markets to soften the blow of declining demand in the west. The fall in oil-prices has shown that weakening of demand can bring even the mighty Organisation of Petroleum Exporting Countries (Opec) down. And if people buy less than their usual quota of clothes, our garments sector needs to look at new markets quickly. For a change, this is where the trade commissions of the government can play the role of facilitator by creating the linkages required.
More thoughts for possible pondering by the special task force of the government. Speed is the essence of the day. (The writer is a Head of Corporate and Regulatory Affairs, British American Tobacco, Bangladesh and former chief Executive Officer of Bangladesh Cricket Board. He can be reached at e-mail: mahmudrahman@gmail.com)