The World Trade Organisation, WTO, chief recently said that due to multiple crises, the globe is inching towards recession.
Of course, several economists had predicted an economic downturn several months ago and with the deadlocked Ukraine crisis, which has major super powers starkly polarised, the economic slump may last longer than expected.
It does not take economists to decipher the rather disheartening state of global economy because there’s inflation almost everywhere, a fuel crisis affects many developing nations plus the raging conflict in Europe has severely impacted the supply chain mechanism, thus landing a crushing blow to commerce.
Several international organisations have already begun deliberations about a very tough winter ahead, which will see thousands of refugees escaping conflict zones faced with debilitating conditions.
For Bangladesh, the Ukraine conflict has translated into several impediments, along with the grim forecast of falling garment orders from developed nations.
Simple logic states that when orders dry up, factories won’t be able to pay regular wages, leading to either termination of jobs or slashing of wages. For the RMG sector, which accounts for more than 80 per cent of Bangladesh’s foreign exchange income, the war in Europe is unquestionably a deadly blow.
In addition, the fuel crisis, capricious dollar exchange rate plus falling foreign reserve coalesce to create a sobering picture.
Sri Lanka, the island nation, once deemed an economic miracle, was almost at the edge of a precipice a few weeks ago and although Bangladesh is not going Sri Lanka’s path, we cannot be complacent in any way because the recession in developed world will affect us at all levels.
Firstly, the reduction in garment orders will see export income shrink from this sector, which means in the coming days garment manufacturers will have to seek out new markets.
Bangladesh has to look for new markets including in the neighbouring countries for its diversified products including RMG that will help the country to recover the crisis.
As per ministry of industry officials, the flow of trade between Turkey and Bangladesh has seen a marked increase in the last few years, the balance of payments being in favour of Bangladesh.
About a month ago, South American nation Argentina expressed desire to expand commerce and trade with Bangladesh with hopes voiced by the South American nation to set up an embassy in Dhaka.
Hugo Gobbi, the ambassador of the Argentina to India, Bangladesh, Nepal, Bhutan, Sri Lanka and Maldives suggested signing of a Preferential Trade Agreement (PTA) between Bangladesh and MERCOSUR as the FTA negotiations might take a long time whereas PTA takes a much shorter period.
Franco Agustín Senilliani Melchior, Head of Economic and Trade Section of the Embassy of the Argentine Republic in India said textiles is one of the major import items of Argentina, which the country sources from other Asian countries.
Naturally, Bangladesh should also consider the country as a potential market for textile and plastic items. For Bangladesh, the future will be about weathering the economic headwind through a very strategic approach aimed at minimising the damaging impact.
This can be done through reducing import of non essential items, austerity at all levels plus a curtailing of all kinds of extravagance. In addition, the need for entrepreneurial spirit buffeted by innovative business ideas is higher than ever. This may sound daunting but Bangladesh, in the first two decades after liberation, embraced food rations, moderate living and frugality in all spheres of life.
Lead time reduction can be ensured through improving services and improvement of seaport facilities, increased railway capacity, improving the efficiency of Dhaka airport by dedicating a special channel for fast clearing of RMG exports, and increasing airfreight capacity in ensuring the fastest delivery of sample goods and other accessories and also developing strong backward linkages. While most importantly, a trade facilitation idea should be introduced, for example, a single window system to reduce lead time.
With prudence form all sections of society; this country can overcome the current economic rough waters.