Bangladesh’s economic indices rebound in July

[Homo Sapiens]

Bangladesh’s economic indices rebound in July​

Experts say it needs to maintain caution​

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FE ONLINE DESK | Published: August 05, 2022 11:01:18 | Updated: August 05, 2022 14:22:07

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-Representational Image


The pressure on Bangladesh’s economy, generated by rising imports against less-than-sufficient exports and falling remittances amid escalating inflation, has eased slightly as the indices have rebounded in July, reports UNB.
Experts, however, do not think the time has come to relax. They have urged the government to be cautious about loosening the austerity measures and the monitoring that were initiated to help the country deal with the global economic crisis created by the Russia-Ukraine war.
The monthly year-on-year rise in inflation crossed the 6 percent mark in February and continued to increase by 7.56 percent in June before falling slightly by 7.48 percent in July.

Bangladeshi importers opened letters of credit, or LCs, worth $5.5 billion in July, down by 31 percent from June, as the central bank continued to tighten its control over imports.
Bangladesh made a record in exporting goods and services in the last fiscal year, but it was not sufficient to pay the import bills as a low remittance inflow had affected the balance of payments, resulting in a shortfall of US dollar reserves.
Last month, exports grew by around 15 percent to $3.98 billion while expatriate Bangladeshis remitted $2.1 billion, a 12 percent year-on-year growth after posting a 15.12 percent fall in the fiscal year that ended on Jun 30.
“The rebound of key indices is of course a matter of comfort, but we should not think this positive trend will last forever. Rather, the government should continue with the cautionary measures,” said Selim Raihan, executive director at the South Asian Network on Economic Modelling or SANEM.

Inflation fell slightly as the prices of some goods fell globally, he said. “But it’s not significant. Inflation in the rural areas increased more than that in the urban areas, which means it affected the poor more.”
“Prices did not fall here as they did in the international market. It means import costs are not decreasing at the expected rate.”
Selim advised the government to strengthen monitoring of the disproportionate rise and fall in the prices of commodities.
“And it is feared that the tension around China and Taiwan will impact the international market amid the Russia-Ukraine war.”
Selim, an economics professor at Dhaka University, sees the rise in remittances will help Bangladesh’s economy the most.
“Because a significant portion of the exports is spent on raw materials and intermediate goods. But remittances are exclusively added to our foreign currency reserves,” he explained.

Exports will however continue to rise because the devaluation of the taka against the US dollar will work as an incentive, he said.
Agrani Bank Chairman Zaid Bakht, former researcher at the Bangladesh Institute of Development Studies, said the efforts to keep inflation down should be persisted with.
He also thinks the Bangladesh Bank should continue monitoring imports to stop attempts to smuggle money out of the country by paying more than the actual price of imported goods.
He welcomed the central bank’s efforts to control the US dollar price by keeping a tab on the money money changers.

Bangladesh’s economic indices rebound in July

The pressure on Bangladesh’s economy, generated by rising imports against less-than-sufficient exports and falling remittances amid escalating inflation, has eased slightly as the indices have rebounded in July, reports UNB. Experts, however, do not think the time has come to relax. They have...

thefinancialexpress.com.bd

 

[UKBengali]

@Bengal71

Imports < Exports + Remittances again.

BD has this under control and foreign reserves are again just over 40 billion US dollars.

 

[Bengal71]

@Bengal71

Imports < Exports + Remittances again.

BD has this under control and foreign reserves are again just over 40 billion US dollars.

Yeah this increased remmitance is light at the end of the tunnel. One of the benefits of oil and gas price rise is that the Arabs are making a lot of money which translates to our people getting work there and sending more money. But it's a sordid affair, I want BD to stop relying on slaves to prop up it's economy.

 

[fallstuff]

This is a simple problem ( over invoicing) to fix IMHO. Separate the essentials ( food items) and raw materials from total import. BB need to calculate and compare the cost and value additions to arrive at what should be the actual import invoice.

State revenue deaprtenments ( Example: Florida) do it all the time to investigate uncollected sales tax.

 

[mb444]

UK is in recession although BoE is saying its possible. Europe definitely so and so is US given interest rate rises.

BD will not be immune. Belt tightening must continue. Increase LC percentage that must be funded by importer themselves. If that is likely to depress RMG export then GoB needs to step in. Buy cotton and other inputs in bulk and bring them in and sell to companies in BD at break even prices, no over-invoicing and bulk discount being passed to our companies. This is same as what is happening with Oil and Gas or wheat.

BD needs to think out of the box. Taka devaluation will increase export but it also makes inputs that we buy in to produce the exports more expensive queezing profits. GoB needs to step in and help not by reducing taxes or giving subsidies but by acting as economic partners. GoB needs to as i said bulk buy inputs and also make things easier by reducing red tapes and if necessary assist in chartering cargo ships in bulk. Our exports must flow and GoB needs to be more pro active. Next 3 years can be the making of BD.