Published in The Daily Observer on Tuesday, 3 October 2017
Floods, low investment, Rohingya crisis affect macro economy
Shamsul Huda
Repeated floods and Rohingya crisis have put pressure on the country’s overall macro economy, say economists.
Despite a consistent growth in gross domestics products, graduation to middle income country and being a member country in the 100-Club, the country is still slow in developing human resources, ensure quality education and attract investments in manufacturing based products.
Dr Fahmida Khatun, Executive Director, Centre for Policy Dialogue (CPD) said while she was sharing her opinion with the Daily Observer.
She said after the ‘haor’ disaster, seasonal crops farming was badly affected and just after recovering the losses there was a prolonged flash floods occurring across the country affecting harvesting of crops.
She said while the flood loss was pounding pressure on food price and its availability, Bangladesh started to experience a sudden influx of Rohingya refugees. It was thus forced to provide humanitarian assistance to people who are not engaged in the country’s economic activities. The pressure may be intensified if the international aid agencies slow down their aid support to the refugees who took shelter in Bangladesh to escape Myanmar army’s persecution.
The CPD economist said, from a different point of view overall economy, especially export and remittance are both recovering quickly after experiencing setbacks.
She said Bangladesh is now a middle income country and it is time to advance from the least developed status to developing status which requires quality education, creation of jobs and technology based human resource.
Md Akhteruzzaman, Economic Advisor, Bangladesh Bank (BB) said overall economy was passing through a strain but it may recover in the coming days as several major indicators are showing positive developments.
Referring to the latest statistics, he said though broad money increased by 10.88 per cent (y-to-y) in June 2017, lower than 16.35 per cent of the same month of the previous year, net foreign assets and net domestic assets registered 14.10 per cent and 9.78 per cent growth respectively in June 2017.
Point to point inflation fell in July 2017 while 12-month average inflation edged up marginally and interest rate spread of all banks narrowed in June, 2017 while call money rate decreased up to August 16, 2017.
The BB advisor said banks’ spread between the weighted average interest rates on advances and deposits narrowed in June 2017 from that of May 2017 and stood at 4.72 per cent which shows loans are becoming cheaper in the economy.
Referring to the Export Promotion Bureau data , he said in the external sector performance the merchandise export increased to USD 3.21 billion in July, 2017 which was 26.54 per cent higher than USD 2.53 billion in July, 2016.
Receipts of workers’ remittances in July 2017 increased by 10.95 per cent and stood at USD1.12 billion as compared to July 2016, he said and added current account balance recorded a deficit of USD 1.48 billion in FY17 due mainly to a significant trade deficit and lower income from services and primary income accounts compared to that of FY16.
According to another BB official credit disbursement of agricultural and non-farm rural credit increased by 18.82 per cent and 20.85 per cent respectively in FY17 as compared to FY16.
He said if there is no major change in the current trend the economy will achieve its projected growth but it is necessary to boost up growth in the private sector credit as per the current amount of GDP.
Compare to other Asian countries in the export market Bangladesh needs to upgrade its technology based developments while improve human resources for high value added exports.