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JAGARAN CHAKMA and SOHEL PARVEZ
Businesses in Bangladesh will face challenges in managing the impacts of higher inflation and exchange rate in 2024 as well while the cost of production and operation may increase amid the rising bank interest, several business and corporate leaders warn.
However, they predict that the situation may improve slightly in the second half of the calendar year if the new government takes time-befitting measures to repair the cracks in the economy.
“Managing inflation and stabilising the currency will be the most important challenges in 2024,” said Asif Ibrahim, vice-chairman of Newage Group of Industries, a top exporter.
The outgoing year was full of uncertainty for many businesses and corporates as importers suffered a lot owing to the shortage of foreign currencies and exporters struggled to maintain the international price level against competing countries.
Imports plunged as the government and the central bank took measures to stop the fall in the forex reserve level. This impacted the purchase of capital machinery and industrial raw materials from international markets.
Foreign investors experienced difficulty in repatriating profits and new investors were constrained by the liquidity crunch, according to Mamun Rashid, managing partner of PwC Bangladesh.
The former banker said official channels saw only 50-60 percent of the possible remittance pie as the higher dollar rate drew remitters to informal platforms.
“Despite some dip in some markets, exporters maintained an overall buoyancy although non-realisation of proceeds made headlines throughout the year,” he said, adding that inflationary pressure has kept the middle- and low-income groups under stress throughout the year.
Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, said geopolitics will be a factor for businesses in 2024.
His worry stems from the persisting challenge posed by the Russia-Ukraine war to the global economy and Bangladesh.
“Additionally, political stability in Bangladesh is important and businesses need policy support to overcome the crisis,” he said.
Ashraf Ahmed, president of the Dhaka Chamber of Commerce and Industry, sounds more optimistic about 2024.
He said next year’s challenges will centre around recovering from the events of 2023 and finding investments for growth.
“On the other hand, we expect the foreign exchange challenges to ease. 2024 should be a much better year for businesses as the macroeconomic scenario at home and abroad may improve, inflation may decline and the fear of a global recession may recede.”
According to Ahmed, 2023 was a reminder that the fundamentals of interest and exchange rates and risk management should never be forgotten.
Selim RF Hussain, chairman of the Association of Bankers, Bangladesh, said: “We have been facing some challenges since the outbreak of the Russia-Ukraine war. We had not seen macroeconomic instability to this scale in the past.”
“We have also not seen such challenges in managing the balance of payments.”