Dr Khondaker Golam Moazzem on political unrest and the economy, published in Dhaka Tribune on Sunday, 1 December 2013.
Government thinks political unrest won’t affect economy
Pro-government economists do not seem to agree with the fears of dwindling growth rate that some noted economists have expressed
Asif Showkat Kallol
Incessant political violence has been having severe negative impacts on every sphere of national life including the country’s economy, with fears high that Bangladesh may lose its strong footing in terms of healthy economic growth.
However, pro-government economists do not seem to agree with the fears of dwindling growth rate that some noted economists have expressed.
In a meeting of the government’s Fiscal Coordination Council on November 12, a planning ministry official was reportedly barred from warning that economic indices might collapse if political unrest continued.
The official was trying to point out that export growth, foreign exchange reserve, remittance and banking liquidities which have so far been moderate, were likely to slide if the political unrest prolonged. He also said development projects had been badly hampered because of disruption in communication and transportation.
But the other members of the council stopped him, saying despite the hartals and unrest, things were not likely to take any alarming turn in the near future, meeting sources said.
Planning Commission Member Dr Shamsul Alam told the Dhaka Tribune that the overall economic growth would not be affected by the opposition’s hartals and blockades.
Claiming that the rate of growth during the ongoing fiscal was above 7%, Shamsul said: “During the BNP-led alliance’s rule in 2006, growth rate suffered because there was full participation of people in the Awami League-led demonstration. But this time around, growth will not suffer because people are not involved with the movement.”
However, what AB Mirza Azizul Islam, a former adviser to the caretaker government, told the Dhaka Tribune was in stark contrast with Shamsul’s claim.
“Some economists whimsically say growth could not be downsized by the political turmoil. But, we have seen that growth has decline over the last three years of the Awami League government – coming down from 6.71 in 2010-11 to 6.23 in 2011-12 and 6.03 in 2012-13. The trend of steady growth has been broken,” the noted economist said.
“In 2006, political chaos lasted only two months. But this time, it is already four months.”
He also said a major section of the country’s manufacturing sector, especially the garment factories, relied heavily on imported raw materials. But, they were now hit heavily by delays in shipment at the Chittagong port because of hartals and blockade.
Readymade garments export had also declined because of the recent 71-hour blockade, which might result in a sharp slide in buyer confidence as well, Mirza added.
Khondaker Golam Moazzem, additional director (research) of Centre for Policy Dialogue, told the Dhaka Tribune: “The government, especially amid political unrest towards the end of tenure, wants to say only those things that go in favour of their activities.”
He suggested that the government must learn to accept and consider the “different” ideas that come up in the Fiscal Coordination Council’s meeting, only for its own good.
The World Bank, International Monetary Fund and Asian Development Bank have also expressed concerns that the impending street agitation in the run-up to the national elections would take a heavy toll on Bangladesh’s economy and its growth.
They have estimated that the country’s GDP growth rate would remain under 6% during the ongoing fiscal, although the finance ministry expects it to grow to 6.6%.
The government has a budgetary target of achieving 7.2% GDP growth in the current fiscal year.
‘During the BNP-led alliance’s rule in 2006, growth rate suffered because there was full participation of people in the Awami League-led demonstration. But this time around, growth will not suffer because people are not involved with the movement.’