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What will happen to Bangladesh’s economy?
MAMUN RASHID
Ever since the investment community started to talk about a rising Bangladesh and the potential the economy offers due to increased consumer spending, we get to host many international investors. Now that things are going a little topsy-turvy, the question is again surfacing: What may happen to the economy?
No doubt, the ongoing political unrest and the garment workers’ agitation in the apparel sector have begun to take their toll on the economy that is already grappling with higher inflation, the depreciating taka, slowing exports and reducing private sector activities.
Both passenger and cargo traffic on the roads inside the cities and highways have drastically reduced for the fear of getting caught up in clashes or arson. The seaports, which handle almost 90 percent of the $130-billion cross-border trade, have registered a decline in cargoes as most businesses preferred not to transport goods.
The same is the case with the transportation of consumer goods from factories to the points of sales across the country and farm produce to cities and towns, resulting in even an interim price hike. No doubt, if this continues, the situation will worsen, and sales will plummet.
This disruption in the supply chain will further fuel inflation, which despite issues with our data integrity, surged to double digits in October and caused more suffering to people at the bottom of the pyramid. The current situation is also impacting the regular or ongoing efforts to stabilise the economy.
Although the economy has been under stress for a year and a half now, things have not gone out of control yet. The ongoing situation is creating uncertainty and troubles for the economy and obviously, the continuation of the political unrest could hit the economy hard.
We have seen some violence and political uncertainty in every election year. But many feel it is different this time. Even the central bank governor has reportedly said he didn’t face this sort of crisis in his entire professional career. Whether prudent or not, he also mentioned that the economy has reached its bottom.
Hence, Bangladesh’s economic problems have turned into a crisis already. And any political unrest may deepen the crisis. The global situation is not favourable either.
Many already urged the government to reach a political consensus through effective dialogue. Otherwise, it will be extremely difficult to revive the economy after the election despite few in the regulatory bodies still sounding optimistic.
If the political unrest continues, it will heavily impact apparel exports. The sector operates under a tight schedule, so blockades or strikes for two to three days throw off the schedule. We already know buyers have the option to shift orders to other countries as many competitor countries have huge capacity. Even the neighbouring one is trying hard to build similar capacities.
Amid the political unrest, garment workers have been protesting for 12 days for a minimum wage of about Tk 25,000. The unrest has led to the suspension of production in as many as 500 factories. Though the minimum wage board has announced a wage hike to Tk 12,500, the protest continues. Even many amongst development partners and off-takers countries are not happy with the way the situation was handled.
Since the country, despite visible progress on the economic front, has almost failed to ensure a peaceful political transition every five years, this kind of scenario is quite known to us. However, over the period of time, the opposition has gained much public support and inner strength too. Besides, our major development partners also identified a congenial political environment to be the most important for sustainable economic progress.
Sooner all the stakeholders come to terms, the better for all of us.
The author is an economic analyst