Turnaround of the economy
Saturday, 1 December 2007
THE economy of Bangladesh remains under a severe stress. The same has been likened to the period immediately after the independence of the country when the preceding war had devastated the economy. There is no denying of the major shocks the economy received in a short span of time. Only months ago, countrywide floods -- occurring twice in rapid succession -- dealt big blows on the economy. Now, about two weeks ago, a cyclone of awful intensity had turned to rubble assets in varying degree over nearly one-third of the economy. Therefore, the economy is understandably struggling to recover from these treble shocks and the task is not an easy one. Thus, it is exceptionally a bad time, now faced by the Bangladesh economy. The country, hit by successive natural disasters, is, thus, experiencing particularly traumatic conditions that have engulfed its economy.
This situation should create a sense of urgency to work for the economic turnaround. Donor bodies from their own first hand assessments of the situation in Bangladesh have realised the extent of damage and need arising thereof. They should see the point of delivering urgent assistance to the country as well as aids to comprehensively and adequately meet needs of different sectors in the medium and longer terms. Much would depend on a generous response of the donors to the crisis faced by the Bangladesh economy; their prompt and adequate commitment of aid and its timely disbursement will be major factors in achieving the economic turnaround. The Bangladesh economy has been growing at a pace of over 6.0 per cent before the calamities. It may not be possible to maintain this growth rate after the devastating experiences. But it should be possible to prevent the growth from reducing drastically if the resource gaps to occur from the impact of cyclone and floods can be significantly bridged by foreign aid.
But managers of the economy also have to play their part pragmatically to pull up the growth rate. The first task in order would be taking all kinds of measures at the fastest so that one-third of the country that has turned into a wasteland, can restart production activities at the soonest. A big part of the population remaining utterly in a state of economic hopelessness or outside production processes and completely dependent on dole, must be a huge liability for the economy. Thus, policies will have to be directed quickly and effectively to revive the local economies in the storm battered areas.
The Bangladesh Bank (BB) Governor has stated that accelerating economic activities is the biggest challenge facing the economy. He also noted that large amounts of surplus liquidity are available with the commercial banks. Thus, the problem is not one of not having investible resources for growth. The problem is really the business environment and in the context of Bangladesh this requires reestablishing business confidence. Many big businesses have recently suffered and slowed down because of a variety of factors, mainly non-economic in nature. Ways will have to be found out to motivate these big players to play their part once again and fully in the streams of production, distribution and banking. The idle funds of the financial institutions also should be made available to numerous small and medium entrepreneurs, existing as well as potential ones.
This situation should create a sense of urgency to work for the economic turnaround. Donor bodies from their own first hand assessments of the situation in Bangladesh have realised the extent of damage and need arising thereof. They should see the point of delivering urgent assistance to the country as well as aids to comprehensively and adequately meet needs of different sectors in the medium and longer terms. Much would depend on a generous response of the donors to the crisis faced by the Bangladesh economy; their prompt and adequate commitment of aid and its timely disbursement will be major factors in achieving the economic turnaround. The Bangladesh economy has been growing at a pace of over 6.0 per cent before the calamities. It may not be possible to maintain this growth rate after the devastating experiences. But it should be possible to prevent the growth from reducing drastically if the resource gaps to occur from the impact of cyclone and floods can be significantly bridged by foreign aid.
But managers of the economy also have to play their part pragmatically to pull up the growth rate. The first task in order would be taking all kinds of measures at the fastest so that one-third of the country that has turned into a wasteland, can restart production activities at the soonest. A big part of the population remaining utterly in a state of economic hopelessness or outside production processes and completely dependent on dole, must be a huge liability for the economy. Thus, policies will have to be directed quickly and effectively to revive the local economies in the storm battered areas.
The Bangladesh Bank (BB) Governor has stated that accelerating economic activities is the biggest challenge facing the economy. He also noted that large amounts of surplus liquidity are available with the commercial banks. Thus, the problem is not one of not having investible resources for growth. The problem is really the business environment and in the context of Bangladesh this requires reestablishing business confidence. Many big businesses have recently suffered and slowed down because of a variety of factors, mainly non-economic in nature. Ways will have to be found out to motivate these big players to play their part once again and fully in the streams of production, distribution and banking. The idle funds of the financial institutions also should be made available to numerous small and medium entrepreneurs, existing as well as potential ones.