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ADB: Trade war to generate additional $400m exports for Bangladesh

  • Published at 04:02 pm March 6th, 2019
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ADB Chief Economist Yasuyuki Sawada addresses a seminar titled 'Impact of Emerging International Trade Relations on Bangladesh' held in Dhaka on Monday, March 5, 2019 Rajib Dhar/Dhaka Tribune

Under the current scenario, China’s export to US will go down as it will lose competitiveness and the supply chain will be affected, said Sawada

Bangladesh merchandise exports will increase additional $400 million and its Gross Domestic Product (GDP) by 0.19% by next one to two years if the prevailing international trade conflicts involving the US and China escalate, said the Asian Development Bank (ADB).

Yasuyuki Sawada, chief economist of ADB, came up with the observation at a seminar titled “Impact of Emerging International Trade Relations on Bangladesh,” held in Dhaka on Monday. 

“…China to lose business of $126.4 billion and GDP can be fall by 1.03%, while Bangladesh exports to increase by $400 million and the GDP to grow by 0.19%,” said Sawada in his presentation.

The visiting chief economist of the multi-lateral lending agency said the US is planning to impose 25% tariff on $200 billion imports from the China, while China is considering trade measures on $100 billion imports from the US.

Under the current scenario, China’s export to US will go down as it will lose competitiveness and the supply chain will be affected, said Sawada.

“As a result, China sees huge direct and indirect affect on trade, whereas other Asian countries including Bangladesh seem to gain out of trade redirection,” he added. 

In the presentation Sawada said sectors like RMG, leather and leather goods might get benefit out of the trade war. But there are challenges such as uncertainty over Brexit, technological unemployment, volatile oil prices in the global market, he added.

ADB Country Director Manmohan Parkash said the emerging trade relations could offer opportunity for Bangladesh to increase its export and capture greater space in the global value chain. Given the demographic dividend Bangladesh enjoys, this could be a win- win situation as it could emerge as a sustained contributor towards creating new job opportunity for the youth.

However, this may not be easy and simple. It will hinge Bangladesh ability to align its trade investment and infrastructure with the operative principle of global value chain, said Parkash.

He said a number of policy actions, incentives, and structural reforms may be needed to woo foreign investors to relocate their industries in Bangladesh.

Parkash said investing in good infrastructure, providing good logistic and easy facilitation can help develop an efficient global value chain and thereby attract global companies to move their productions centers to Bangladesh.

“China is the largest exporter but I can assure that Bangladesh will be benefited from the trade conflicts. Despite having negative impact on the global trade, Bangladesh's exports especially ready made garment products will grow further,” Commerce Minister Tipu Munshi said. 

Fresh work orders are coming here. But Bangladesh has to properly follow what is happening there and come up with long term plan to tap the opportunity, said the minister.    

“We can take the advantage of US-China trade war,” he added.  

According Otexa data, Bangladesh’s export to US market stood at $5.20 billion, up by 5.72% in January-November of 2018. While apparel export to US market seen a 6% jump to $5 billion in the same period.

However, the ADB has cut GDP growth rate to 7.5% for the 2018-19 fiscal year. Last year, the regional lender has forecast that Bangladesh GDP will grow at a rate of 7.90% in the FY19.

In the 2017-18 fiscal year, Bangladesh has achieved a 7.86% growth, according to Bangladesh Bureau of Statistics.