Election-time unrest disrupts import and export activities, while banks witness large number of irregular transactions, these factors slows down the economic growth
The economy is witnessing a relatively stable period, thanks to the comparatively calm political situation in Bangladesh.
However, when taking into account the scenario during past polls-time periods from 1991 to 2014, it appears likely that the economy could get a few jolts in 2018.
During general elections, political programmes, counter programmes, clashes, violence, strikes and blockades are very common throughout Bangladesh. The unrest disrupts import and export activities and banks witness a large number of irregular transactions.
Many people transfer their money to overseas bank accounts in a bid to prevent losses, which in turn slows down economic growth. The move also negatively affects all major aspect of the economy, such as the currency reserve and remittance.
The polls-time economic challenges came to light following detailed analysis of data collected by institutions such as Bangladesh Bank, Bangladesh Bureau of Statistics, Export Promotion Bureau of Bangladesh (EPB) and Bangladesh Securities and Exchange Commission (BSEC).
An “Economic Survey,” conducted under the Finance Ministry, was also consulted for insight into the matter.
The survey revealed that despite a dip in economic activity during the polls-time period, the growth resumes its steady pace after the election.
The business community and people concerned have started speculating about how trade and commerce would turn out during and after the 11th general polls, scheduled to be held in 2018.
A number of businessmen expressed concern that Bangladesh might not be able to reach the projected economic target in 2018.
Similar phenomenon has been witnessed after the 10th general polls in January 5, 2014, and previous general polls held in 2008, 2001, 1996 and 1991.
According to the Bangladesh Economic Review 2008, the trade deficit in the 2007-08 Fiscal Year stood at $3,921 million. The election was held the same year under the caretaker government.
However, the trade deficit for FY 2006-07 was $2,374 million, which is a clear indication that political violence affects Bangladesh’s economy significantly.
In a similar report by the Bangladesh Bank, in FY 2008-09, Bangladesh received remittance of $9.7 billion. However, in the next fiscal year (2009-10), remittance went up at $11 billion.
The central bank recorded inflation standing at 6.99% in June of 2014, which was an election year. The next year, inflation came down at 6.4% in the same month.
The GDP growth stood at 5.05% during the election year of 2008. The next year, the GDP growth went up to 5.57%.
In a similar manner, GDP growth reached 6.51% in the election year of 2014, but it went up at 7.11% in the 2015-16 fiscal year.
On December 23, 2014, the Bangladesh Bank had a foreign currency reserve of $22.34 billion.
The central bank reserves increased to $28 billion the following year at the same date.
According to the Bangladesh Bank, a total of 1,432 projects were registered under three categories (domestic, foreign and joint) in the election year of 2014. The budget for these projects were fixed at around Tk72,138 crore.
The projects were projected to offer at least 253,000 employment opportunities.
Meanwhile, projects registered in 2015 had a budget of Tk87,525 crore. So, the data shows that the budget for the projects registered in 2015 had a 21.32% increased budget compared to the projects registered in 2014, an election year.
In 2014, agricultural credit of Tk16,037 crore was disbursed, but in the next year, Tk16,400 crore was disbursed for the same purpose.
Around 20% of the Annual Development Programme (ADP) was implemented in 2014, but in the first five months of 2015, ADP was implemented by 24%.
Meanwhile, the private sector debt flow stood at 13.19% in 2014. In 2015, the debt flow reached 13.22% two months before the year came to an end.
Speaking on the issue, former Bangladesh Bank governor Dr Salehuddin Ahmed said: “To maintain the economic growth, political stability is a must during the election year of 2018.”
Meanwhile, Research Director at the Center for Policy Dialogue (CPD), Khandaker Golam Moazzem said: “The stability of the economic sector of Bangladesh in 2018 directly depends on the consistency of the country’s economy in 2017.
“However, 2018 is an election year, so it is possible that the country could witness a political shift. If the political arena remains comparatively stable, it will not negatively affect the economic sector.”
Responding to a query, Dr AB Mirza Azizul Islam, a former advisor to the caretaker government, said: “The economic growth stood at 3% during the 1980’s, but it had currently exceeded 7%. We need political stability keep this growth stable.
“The economic growth can be disrupted not only by the polls-time period, but by any political unrest in the country. The economic landscape of Bangladesh in 2018 will be directly influenced by political and social stability.”
Dr Islam added that a developing country needs political stability to move ahead, which is rare in Bangladesh.
“So politics has become an impediment to development. Business environment and investment both have become victims of the frequent political unrest in Bangladesh. The only way to resolve the issue is to keep politics separate from the economic sector,” he told the correspondent.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) FBCCI President Md Shafiul Islam said: “Several initiatives are in the pipeline to take the economy forward. The businessmen community is making plans centring the economic zones throughout the country, which would help Bangladesh reach new heights.”
He added: “With policy support from the government, and political stability, the country will continue to progress. The economic landscape of 2018 will depend on the stability of the country, during the 11th general polls.”
This article was first published on Bangla Tribune