Page 50 - ICE BUSINESS TIMES January 2020

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BANGLADESH
ECONOMY

like the onion price hike, that kind medium scale. Then we have who are maybe mothers. Since we
of a bubble, then it is a different some of the service sector, e.g. don’t have proper daycare
story. So far so good. banking, telecommunication. facilities, child rearing becomes a
The one concern on the inflation Even wholesale and retail trade, full time responsibility.
front from the demand side is that apart from the departmental We don’t have employment growth
public borrowing is growing very stores and supermarkets, is in the formal sector. The main
rapidly and if that leads to largely an informal sector, where problem is private investment, it is
Matters of monetary policy target, then there registered. In the formal sector, the GDP. If existing employers are

almost stagnant as a percentage of
some of them aren’t even
monetary growth beyond the

not expanding their operations or
the employment picture does not
could be some demand pull factors

new firms are not coming into
look that good. The biggest
coming in. There is also a demand

business then where will the jobs

employer is garments, in recent
pull from the remittances which
Macroeconomy are doing really well, which is the news from BGMEA, 200-250 come from? It’s not like

investment is not happening at all,

factories have been closed down
only indicator that is strongly

laying off 20,000-30,000 workers.
but investment proportion of GDP

positive, while the remaining are

is not moving. We have like
The 2017 labor force survey

strongly negative.

What’s your take on the shows an absolute decline. 22-23% private investment rate,
and for a country like Bangladesh

Exports have been doing poorly

unemployment rate? How this fiscal year; there are some if you want a sustained 7% growth
do we improve the serious concerns about rate, then it has to be around
In conversation with Marjiya Baktyer numbers? joblessness in the formal sector 28-30% of GDP. It’s a rule of thumb two years we got rid of $9 billion, excess demand? We have to d
Ahmed, Dr. Zahid Hussain, former lead did okay, but later we have seen On the unemployment front, we employment, particularly for calculation. If you look at the so if there is any big shock to the whether we want exchange rate
economist at the World Bank advises on some reversal both in don’t have recent numbers. The females since garments labor countries that have done really economy like the one we are stability or reserve stability. If you
well on generating jobs in

force is largely comprised of

having now with exports being
how to overcome the pitfalls of our food-inflation and non-food last survey was done was in 2017. women workers. A part of the numbers and quality, you realize down 7.6% in the first five months, want exchange rate stability t
you have to make sure you have

inflation. It now stands at 6.05%.

projected numbers for FY20. One reason is the infamous onion The other numbers that you see reason for this labor shedding is that our problem is not just that trade deficit has expanded, the adequate reserves all the time so
that comes from General
price hike, although onion in the Economics Division are projections automation, moving onto more we don’t have enough employment current account deficit has you can intervene in the foreign
proportion of total expenditure is based on growth numbers. We 4IR technologies. The amount of opportunities, but the jobs declined as remittances have exchange market. Bangladesh
What is the state of the However, you don’t get to see inflations were creeping up. The not that big – it is 1.6% of typical work previously done by four available are not worth much. The boomed by 22%. That has been the Bank is still very adamant about
economy in terms of such strong momentum in the rice price collapse story was the household expenditure . But the have not gone to enterprises and people is being handled by one income is not that great. You want savior. On the financial account, keeping the foreign exchange r
done a labor force survey, because
growth? economy. BBS is the ‘only’ result of bumper crop causing rice price increase was so high, like unemployment is not something since new machineries are coming both employment growth and the foreign aid disbursement has stable and not devaluing the taka
We are the fastest growing source of national accounts prices to fall significantly. 400-500% so even though the that we regularly measure. For in. However, automation is not wage growth. Wage growth in slowed, but it is still good. We too much. Our official policy is
economy in the world depicted data. So, we cannot outright International commodity prices weight is low, but the growth is so unemployment, we need regular the only reason; there is also a Bangladesh has barely kept up have declining exports and that it is a floating exchange rate
by the official estimate. The reject it, but we cannot are very stable, so inflation in high, that it has a visible impact. surveys, a kind of system we have competitiveness problem. The with inflation and the growth in depressed imports which means system and we will allow market
problem with the official unquestionably accept it either. Bangladesh is largely determined There were other knock on effects not developed yet. We have unemployment rate among the nominal wages has been below the the economy is not doing well demand-supply to do the work.
estimate is its inconsistency There may have been healthy by supply side factors, the cost of like other spice prices being anecdotal evidence. Now, most of educated youth is the highest inflation rate in some sectors such which is why people are not Bangladesh Bank should only
with the other growth-related growth. 6+ is a very healthy imports, domestic production. increased, alongside rice prices our employment is in the informal among Bangladesh. There is also as fisheries and construction. In buying and investing so current intervene when exchange rates
indicators. In order to explain growth when we compare with Fiscal year wise, FY19, inflation have crept up a little bit. Then in sector – 85% plus of our labor a big category outside the labor the manufacturing sector, wage machinery imports are down. From become extremely volatile like 85
where this growth is coming other South Asian countries. the non-food, the house rents and force. The employment level in the force. They are the NEET, people growth has stayed ahead of the a balance point of view it is a today, 90 tomorrow and 80 the
from, we have to break it up Exports and remittances were several other consumer prices informal sector does not really who are neither employed, nor inflation rates, so there have been positive, because it is reducing day after. There are certain
and look at the drivers of good, and our agriculture (clothing, footwear) went up. We change that much, what changes educated, nor in training, but 1%-2% real growth in wages. For a pressure for payments, but if we positive factors which give us a
growth - the official numbers on production was struck with the Bottom line: external stability have the same target of 5.5% in is the hours worked. Open these are young people who are country like Bangladesh, you want economic growth to pick up sense of comfort and these are
the expenditure side. But you good fortune of two bumper is comfortable, but export FY20, but now inflation is above unemployment rate in Bangladesh working age people. 9 out of 10 expect a lot more, but if you don’t and investment to be higher, then remittance, the reserve we al
see it is private consumption crops. Public investments in that. Depending on the boro is always very low. If you compare are women between the ages of have investments and the formal imports will rise creating pressure have and the amount of committe
and investment. Usually the some projects are visible, like decline is a worry. Reserves production, I think it will still be it with the developed countries, it 25-40 who are educated and sector is not expanding then you on BOP. The main issue on the aid money in the pipeline. If we
contribution of foreign trade is the Metrorail, Padma Bridge, are okay but Bangladesh possible to bring it back down to would be below the natural rate, capable, but not in the labor cannot have good job creation. external balance front is what do utilize them properly, then we will
negative as we have a deficit which may have supported the Bank’s intervention in the 5.5%. We still have six months left, which doesn’t really mean much. market. The number is around a we want to stabilize? We have so not face an external balance
since imports are greater than growth. foreign exchange market is a and the international commodity People can’t afford to not do staggering 4 million. When you How do we evaluate the far chosen the stability of the problem.
exports. But last year imports worry. We need to let go of the price outlook is fairly stable. The anything in a country like are not finding jobs in the labor macroeconomic balance of exchange rate, so when we think
were depressed and exports Can you talk us through exchange rate. Fiscal debt is most important price for us is the Bangladesh. They may work in a market, then you get frustrated external policy? there is an excess demand for Can you shed some light on
recovered so there was a the state of inflation in okay, but revenue is slipping oil prices. All our major imports tea stall, or as a rickshaw puller, it and stop looking for jobs. Once When we talk about external dollars in the foreign exchange fiscal and monetary
turnaround, but that is not the country? like the diesel, furnace oil, doesn't mean they are working full that happens, you are not policies, bottom line we are doing market and if the Bangladesh policies?
enough to explain 8+ growth. On the inflation front, it was and expenditure is getting out petroleum, fertilizers and many of time. Even if they are working full considered unemployed. The fine. The total amount of reserves Bank doesn’t do anything then the The other side of macroeconomi
Investment to GDP ratio has within the targeted 5.5%. The of control. If the financial the food products we import, they time, it doesn’t mean they are definition of unemployment is not that we have is still comfortable; taka will depreciate so we start is fiscal and monetary polici
been flat as evident from the 2018-2019 inflation outcome sector becomes unstable, are all linked with oil prices. The productive in that work. having a job but seeking one. they can finance 5 and a half selling dollars to keep taka stable. On the fiscal front we have a ve
credit growth and capital was exactly 5.5%. Food inflation people lose confidence in projection I have seen, oil prices The concept of unemployment in This is known as the discouraged months of imports. But comfort However, when you start doing low debt to GDP ratio. All the
machinery import numbers, was down which was the main banks, so they start remaining between 65-70 dollars a the textbook applies more to the worker hypothesis. Most of the and complacency are two different that you start destabilizing the analyses that IMF does, all the
which are supposed to be reason why inflation was within withdrawing their deposits, barrel, which is fairly standard, formal sector, where we have the women in the NEET category are things. There is no reason for reserves, because how long can projections that we do suggest
correlated with growth. the target, but non-food but we are not there yet. but of course if we have problems manufacturing sector in a large or perhaps young married women complacency from this comfort. In you sell off dollars with persistent that the risk of public debt
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