ECONOMIC PROJECTIONS

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Macroeconomist and Public Policy Analyst Debapriya Bhattacharya, a Distinguished Fellow at the Centre for Policy Dialogue (CPD), shares insights into Bangladesh’s economic future.


 

What factors are anticipated to influence Bangladesh’s economic performance in 2024?

Restoring macroeconomic stability is the foremost current concern of the Bangladesh economy, and it hinges on taming inflation, stabilising the foreign exchange regime and managing our external debt. We need to align the exchange rate of the taka with the market situation and make interest rate fixation in the banking sector more flexible.

Securing an enhanced and stable flow of foreign exchange earnings, particularly through enhanced net exports and accessing more remittances from expatriate workers will be crucial. These are necessary not only for meeting our outstanding demands for external payments but also to finance stalled private investments. Indeed, we may need to allocate a larger amount of foreign exchange in the near future to import food grains to ensure food security at the household level. Incremental foreign currency will also be necessary to service the burgeoning foreign debt liabilities.

To protect the consumption level of low-income households, in the face of high market prices of food items, the government will have to scale up the open market sales by the Trading Corporation of Bangladesh.

However, a number of outstanding structural issues concerning the future of development in Bangladesh exist. These include diversification of exports beyond garments, boosting agricultural productivity, and investing in quality education and healthcare. Also, we must tackle widespread inefficiencies and corruption, ensuring public services to disadvantaged communities.

What are the challenges that Bangladesh may encounter in its economic development this year?

Our economic success will be predicted by the availability of a strong political will to implement much-awaited institutional and regulatory reforms. We shall have to keep the commitments made to the international financial institutions and remain mindful of evolving global dynamics, where geopolitical factors will hold increasing sway in our national development.

However, even amidst these uncertainties, a more profound question echoes: how do we ensure that Bangladesh’s economic growth translates into shared and inclusive prosperity for all? On the one hand, in the recent decade, we have witnessed impressive GDP growth, infrastructure development and social welfare measures; on the other hand, income and opportunity gaps have deepened alarmingly. This discernable rise in inequality concerns not only income but also asset accumulation, consumption trends, as well as education and health indicators. We must confront this rising inequality, seeking ways to uplift those who have been ‘left behind’ in the march towards a higher-income country. Neglecting the plight of our marginalised communities, facing discrimination and deprivation of their civil rights, not only hinders social justice but also undermines our economic potential. Integrating all sections of society into the national development narrative is not just a moral obligation, but a strategic imperative for sustainable growth.

Fortunately, the global economic projections for 2024 offer some hope. With the possibility of a receding economic recession in the developed world, stable commodity prices in international markets, and a decline in global inflation, potential opportunities await us. However, it is crucial that domestic political uncertainties, geopolitical factors, or any other unforeseen challenges should not prevent us from fully capitalising on this emerging external climate.

In your view, how can the government strategically address issues related to inflation and maintain stable price levels in 2024?

There is no silver bullet for tackling inflation. It requires a comprehensive and coordinated strategy, particularly focusing on a dynamic interface between monetary and fiscal policies. Primarily, a prudent approach involves monetary control, involving a reduction in credit to the private sector and cutting down on government borrowing. Careful consideration must be given to interest rate adjustments to prevent the pass-through of imported inflation.

Managing political and social fallout from public distress due to inflation is also pivotal. Thus, more domestic resources are necessary for underwriting expanded social protection programmes.

There are no supply-side failures when it comes to domestically produced goods and there is high demand for them. However, the government’s measures had been pretty ineffective in controlling the syndicates that manipulate the prices and markets. Addressing price manipulation by such syndicates in the domestic market demands improved information flow, heightened oversight by governmental bodies, and broader engagement of trade bodies and public representatives.

Considering environmental concerns and global sustainability goals, how can Bangladesh balance economic growth and environmental responsibility going forward?

Resilience and sustainability are inseparable from long-term economic success. While moving away from fossil fuels, Bangladesh has to rearticulate its energy security paradigm. In this connection, the country must consider options like gas exploration both in land and in the sea, as well as assess the use of nuclear power’s potential. Utilising renewable sources of energy, such as solar and wind power, is also emerging as a viable option. For the ‘green transition’ to happen, proper waste disposal solutions are crucial for various industries, including textiles, medical, and beyond. Indeed, unplanned urbanisation is making waste disposal quite hard and hazardous. No less important in this regard will be the delivery of the commitments, financial and otherwise, made by the international development partner to least developed and climate-vulnerable countries like Bangladesh. Addressing environmental concerns requires collaboration across all sectors. Access to green technologies and fostering public awareness will be key drivers of sustainable progress for Bangladesh.

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