Every five years preceding the national parliament elections, Bangladesh's economy contends with a multitude of crises.
This time is no exception, as the nation faces challenges such as a dollar crisis, business losses due to strike-blockade programs, and a decline in foreign investment. However, economists express optimism, saying that the peaceful conclusion of the polls on January 7 may bring relief to the economy.
Already, signs of improvement are evident. Remittance inflows have increased, and export earnings have proven resilient, contributing to sustained growth.
Furthermore, measures have been taken to prevent a fall in foreign exchange reserves.
Dr Zayed Bakht, a researcher at the Bangladesh Institute of Development Studies (BIDS) and chairman of Agrani Bank, believes that the economy may soon gain momentum.
Zayed Bakht said that ordinary investors typically shy away from investing before elections. With a fair and acceptable vote now completed, political stability is expected to prevail, encouraging businesses to refocus on investments.
He emphasized that the public's confidence has likely been restored through this election, paving the way for economic recovery.
Foreign perspectives also play a role in shaping confidence. Zayed Bakht said that while there were concerns raised by foreign entities before the election, the current positive outcome appears to have reassured them.
He suggested that as long as the people are content with the government, foreign entities are less likely to express discontent.
The Agrani Bank chairman underscored the importance of addressing inflation promptly, highlighting that certain unpopular policy decisions, such as leaving the dollar rate to market forces, may be necessary for the economy's sake.
He acknowledged that short-term inflation may rise, but anticipated a decrease in the long run. Additionally, a renewed focus on revenue generation and a strong stance against corruption are seen as positive steps.
Bangladesh Bank Governor Abdur Rauf Talukder echoed the sentiment that the economy tends to turn around after elections.
Recently, during an exchange with journalists, he said: “This happens every time before the election. We see uncertainty. After the election, when the new government is formed, you will see that the economy will turn around very quickly.”
Former Bangladesh Bank governor Atiur Rahman acknowledged the relief felt in society due to the election's positive outcome, emphasizing the ongoing need for economic reforms.
“We have turned around from a difficult situation. But challenges remain because the economy needs to be reformed. And the reforms that have started in the economy should be strengthened. The good news is that we are already in the midst of reforms,” he said.
Atiur Rahman outlined the existing challenges and calls for strengthened reforms, mentioning ongoing efforts to reform the International Monetary Fund (IMF) and harmonize monetary, fiscal, and revenue policies.
While progress has been made, he suggested resolving lingering issues such as confusion around the exchange rate with the dollar.
Economic data predicts positive trends
Meanwhile, economic data indicate positive trends, with foreign exchange reserves on the rise and a notable increase in remittance flow.
The reserve, which went down to $19 billion, has now increased to $21 billion. According to the data of the Central Bank, the remittance flow in the recently concluded December month has increased by about 17.06% compared to the same period of the previous year.
The United Nations Department of Economic and Social Affairs predicts a drop in the average inflation rate in Bangladesh, offering a positive outlook for the coming years.
In a report entitled “State and Prospects of the Global Economy 2024”, the organization said the average inflation rate in Bangladesh may drop to 6.8% in 2024. However, the GDP growth will be slightly reduced to 5.6%.
The average inflation in this country was 9.6% in the recent year 2023. In the new year, it will come down to 6.8%. In 2025, it will further decrease to 5.5%.
Since the start of the Russia-Ukraine war, global inflation has been on the rise. In August 2022, after the price of all types of fuel oil was increased by 50% in Bangladesh, the inflation surged.
Meanwhile, according to data from the Export Promotion Bureau (EPB), the country's product exports decreased in the recent month of December.
Compared to last year, there has been a decrease of 1.06% in export income in December of this year. With this, the export income of the country has decreased for three consecutive months.
However, in the six months of the current financial year (July-December), the export income of ready-made garments has increased by 1.72%.