DHAKA, Jan 4: The London-based Economist Intelligence Unit (IEU) in its forecast for the new year suggested that Bangladesh along with China would be the two “fastest growing Asian economies in 2002” and observed that China and Bangladesh GDP to grow by 7.4 and 6.2 per cent respectively.
This is, indeed, a good news by any standard at a time when EIU has also estimated the world’s GDP growth by 1.2 per cent in 2001 and the economic scenario for 2002 would be “unpromising.”
However, the country’s top economists do not attach so much importance on the country’s GDP growth figure for the new year, which they feel would probably be achieved largely because it would perhaps be based on good weather and crop production as has happened in the last couple of years.
The impact of the calendar year 2001 on Bangladesh economy has not been very smooth. In fact, if anything, it has left a kind of roller coaster impact on the economy.
Dr Wahiduddin Mahmud, a noted economists who teaches economics at the Dhaka University, points out that the country’s exports began to fumble from the very beginning of FY2001 (June 2000-July 2001). The exports and industrial growth rose to 23 and 11 per cent respectively in the first-half of the last fiscal (July-December 2000). But the same drastically shrank to 2.3 and 1.2 per cent respectively at the end of fiscal year (January-June 2001).
However, what followed subsequently was quite traumatic. At the end of November since July 2001, exports further dropped to a negative growth of 10 per cent — this happened for the first time in two decades. “It is still difficult to say for sure,” says he, how much dent the ongoing global recession would leave on the country’s economy as the global scenario is rapidly unfolding, making forecasts at this stage like shooting a moving target.”
Macroeconomic balances continued to deteriorate, marked by high fiscal deficit and declining foreign exchange reserves. As in the last couple of years, the performance of the agriculture sector appears to be the only silver lining in an otherwise gloomy scenario. Inflation has been low in the last two years thanks largely to successive bumper harvests, but the latest hike in the petroleum products — with effect from 1 January, 2002 — is likely to create some pressure on the price situation.
Borrowing from the country’s banking system by the government — a regular feature in recent years — to meet the rising revenue expenditure due to fall in the revenue earnings, continued during the whole of 2001. During the whole five-year tenure of the former Awami League government experienced quite an uncomfortable foreign exchange reserve situation, which continued to decline. The AL regime ended up with foreign exchange reserve level at $1.12 billion when it handed over power to a caretaker government in mid-July. The reserve situation is still hovering around the same level.
Nearly 90 per cent of over 1.5 million workers in the country’s readymade garment (RMG) and knitwear industry are women who are losing their jobs as several thousand RMG factories have been closed down as their work orders have either been cancelled or are not coming forth. This joblessness of these young women may in due course emerged as a big social problem in the coming days.
M. Syeduzzaman, Chairman of Bank One and former finance minister was also critical of former finance minister Shah A M S Kibria’s handling of the country’s economy during his five-year tenure. He told Dawn: “The new government inherited a very bad economy. It will take sometime before things could be reversed.”
Amid all the downsides, the upside is the low inflation rate and robust growth in remittance, and strategies should be built up with these strengths, He added.
Besides, duties and taxes have been imposed on the import of 25 non-essential items to conserve forex and trimmed the annual development programme (ADP) for the current fiscal year 2001 (ends on 30 June 2002), shedding some unproductive and non-essential projects. The government has also taken some measures to increase the flow of remittances from Bangladeshis working abroad through official channels.
A recent World Bank study revealed that almost half of the total funds being sent by the Bangladeshi workers abroad annually find their way into home through unofficial channels. These funds amounting to around $2 billion are used in financing smuggling operations by various syndicates, the survey said.
Revenue earnings during the first half of FY2002 (July-December 2001) stood at Taka 86.25 billion and missed the target by 2.32 per cent. However, the collection is over eight per cent compared to the corresponding period last year.