Published in Natun Barta on Wednesday, 1 January 2014.
Economists see hard times in 2014
Natunbarta Desk
Dhaka: Attaining projected growth and reining in high inflation will be new economic challenges for the country in the year 2014 that would start from midnight today (Tuesday), reports The Financial Express newspaper.
Terming the next Gregorian calendar year a ‘bleak time’ for the economy, economists said only quick resolution of the ongoing political problems might help the economy return to track.
They cautioned about the high non-performing loans (NPLs) in the banking sector saying the problem might deepen further in the next fiscal year if the ongoing restive politics lingers.
They said falling output in the industrial sector and supply disruption will push the food inflation up, thus, eroding real income of the limited-income people.
“I see a very bleak picture right at this moment for the economy in 2014,” Dr Ahsan H Mansur, an economist and executive director at the Policy Research Institute of Bangladesh (PRI) said.
Mansur, who worked in one of the Bretton Woods institutions, the IMF, said the largest Boro crop is now being affected seriously following supply crunch of fertilisers and diesel. This would pose a serious threat for the country’s food security in 2014.
“I don’t know how the government will tackle the possible shortfall in production of Boro, which has the largest share in rice production of the country,” Mansur said.
He said Bangladesh has huge opportunities for taking advantage of geo-politics and high cost of living in China in terms of attracting foreign direct investment (FDI).
“We may fail to capitalise this following the political turmoil,” Mansur added.
Dr Mustafizur Rahman, executive director at the Centre for Policy Dialogue (CPD) said production, consumption, supply chain, investment, export and import all have already been affected by political turbulence. “The picture of these variables will be worse once the ongoing situation lingers on to next year.”
Terming 2014 as the year of uncertainty, Rahman said the functioning of the government will be squeezed in the next year.
“The implementation of the Annual Development Programme (ADP) will become slow further if the situation persists next year,” Rahman noted.
The CPD executive director said the government needs to join different global negotiations in the World Trade Organisation (WTO), on climate Changes and aid for trades to grab economic opportunities.
“If the government remains busy with the domestic crisis that has been continuing for months, how will it play its due role in such negotiations,” Rahman asked.
He, however, expressed the hope that the political parties would resolve the ongoing crisis quickly considering the interest of the economy and possible opportunities to expand economic activities in the country.
Asked about the falling trend in workers’ remittances, Professor Dr MA Taslim said this will not affect the balance of payments right at this moment. “Our imports have now decelerated and if it picks up, we’ll face its bite.”
Taslim said the banking sector saw many scandals in recent years. “If our banking sector loses its confidence, then it will affect the economy adversely,” he said.
Taslim expressed his worry about the slow overseas employment.
“I think this is the failure of diplomacy of the government and it will see the economy bleed,” he said adding slow migration of workers did not happen overnight.
“Our relations with all Middle East countries have worsened and this is one of the key reasons for slow migration of our workers,” he said.
“I think the next year is a bleak time considering the possibility of a fall in remittances,” he said.
The country’s remittances inflow might fall more than 3.0 per cent in 2013. “This is the fall in more than one decade after 2001,” he noted.
“I foresee hard times ahead,” Taslim said.
“I see conflict in politics and the deteriorating law and order situation will dampen all economic activities including FDIs and local investment.”
“I also don’t foresee any recovery unless there is a dramatic change in politics,” Taslim said.
Quoting a report of the BGMEA, Taslim said the export will suffer from the March-April period.
“There is no new order for garment exports from March next. So exports will be hit hard from that time.”
“Once the export receipts fall, it will affect financial sector, employment, and related service sectors seriously,” Taslim, who served as chief executive at the state-owned Bangladesh Foreign Trade Institute, said.
However, Ahsan said the government must move with caution while dealing with the fiscal policy.
He forecast that revenue generation might fall by at least Tk 120 billion in the fiscal year 2014.
“The fiscal policy aims at cutting unnecessary expenditure as it will lead to government borrowing from the banking sector.”
natunbarta/EK