Bangladesh’s economic growth is hindered by escalating costs of funding and energy supplies alongside political instability. Business leaders express concern over liquidity crises affecting banks and a significant slowdown in GDP growth. There are calls for comprehensive reforms, skill development, and diversification of exports to invigorate the economy.
The economic growth of Bangladesh has been experiencing a decline due to elevated interest rates, costly energy supplies, and political instability. Leaders from trade organizations and economists assert that despite possessing a large workforce, the high expenses associated with funding and energy are hampering business progress.
Zakir Hossain Nayan, Convener of the Anti-Discrimination Business Forum under the Federation of Bangladesh Chambers of Commerce and Industry, highlighted that local businesses are facing turmoil as a consequence of the increased interest rates and the escalating value of the US dollar. He noted, “People have reduced their consumption due to high inflation within their income limitations.”
Nayan further explained the liquidity crisis among banks, attributing it to the prior government’s misuse of banking policies. This complication has resulted in several banks being unable to make new investments and a prevailing cautiousness in funding. He projected that business growth will remain subdued throughout the latter half of 2024, but mentioned signs of improvement resulting from government interventions to facilitate banking operations.
Taskeen Ahmed, President of Dhaka Chamber of Commerce & Industry, reported that the GDP growth during the first quarter of the current fiscal year was a mere 1.8%, with the manufacturing sector lagging at an increase of only 1.43%. He stressed the necessity for skill enhancement in the small and medium-sized enterprise sector, advocating for eco-friendly credit access and development of infrastructure to attract foreign investment.
Ahmed underscored the potential for export diversification beyond the readymade garment sector to include pharmaceuticals and information technology. He emphasized that a comprehensive ‘Smooth Transition Strategy’ is essential and urged the government to ensure the provision of low-cost funds to stimulate business expansion.
Khandoker Rafiqul Islam, former President of the Bangladesh Garment Manufacturers and Exporters Association, acknowledged the challenges faced by the garment sector regarding the sustainability of current export performance. He indicated insufficient working capital and energy supply as significant barriers.
Recent findings from the Bangladesh Purchasing Managers’ Index (PMI) indicated a slight downturn, with expansion slowing in construction and services sectors, but growth persisted in agriculture and manufacturing. M Masrur Reaz, Chairman and CEO of Policy Exchange, noted ongoing expansion, yet cautioned that weak business confidence linked to demand issues, energy interruptions, and political protests could inhibit future growth.
In summary, Bangladesh is currently grappling with economic challenges characterized by high interest rates, an escalating currency value, and significant energy supply issues. Business leaders have expressed concern regarding the sustainability of growth within the economy and emphasized the need for strategic reforms and governmental support to revive the business environment. While prospects remain vigilant, many experts cite significant hurdles that, if overcome, could facilitate a more robust economic recovery.
Original Source: unb.com.bd
