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Dhaka Tribune

Sanem: Bangladesh faces biggest macroeconomic challenge amid global recession

Bangladesh is still recovering from the supply chain disruption that occurred during the Covid-19 pandemic

Update : 29 May 2022, 05:01 PM

Bangladesh is facing its biggest macroeconomic challenge in the last one decade, said Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem).

The International Monetary Fund (IMF) predicted that the world was moving towards a recession, he also said.

Bangladesh is still recovering from the supply chain disruption that occurred during the Covid-19 pandemic, he added.

There was an inflationary pressure and the underprivileged suffered the most according to government data, he said.

He was speaking at a roundtable titled "Where is the Economy Heading Towards and the Next Budget" organized by Daily Prothom Alo at its office in the capital on Saturday.

There is a notion that soaring inflation was the reason for a rise in demand after the recovery of the coronavirus pandemic, Raihan said, adding that he believed the supply chain disruption was causing the inflation.

The exchange rate of the taka against the US dollar was an area of relief in the last one year with ample supply of dollars in the market, but that comfort also diminished with the recent crisis in the sector, he said.

The depreciation of the taka against the US dollar cannot be held off forcefully. It needs a gradual adjustment. The difference between official and unofficial exchange rates of the taka against the US dollar will boost hundi transactions, Raihan warned.

"We must think about how long we will rely on remittance and garments as drivers of our economy as both things depend on the existing condition of other markets. We are not under pressure like Sri Lanka in terms of debt management."

But Bangladesh must be wary, since many of the country's mega projects are financed by foreign debt and these may suffer for cost and time overrun and lack of feasibility study, he said.

"We want to see some mega projects in education, health and social safety net sectors," he added.

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