Bangladesh likely to avoid global economic recession

Almost two-thirds of chief economists believe a global recession is very much likely in 2023 which will be more than twice as many compared to the survey conducted in September 2022. The recession rang an alarm bell all over the world. If world recession is inevitable then can Bangladesh face it?

We are already in financial crisis with higher price hike of essentials, depreciating exchange rate of our local currency because of the butterfly effect of the high money inflation globally, especially in Europe. Bangladesh Bank in its central report published on January 18, 2022 expressed its worry about the challenge the country in going to face in 2023.

In its report it said keeping inflation in check while maintaining stability in foreign exchange rate will be the biggest challenge for Bangladesh in the coming days. It is rightly pointed out but no clear-cut road map has been presented how it will tame the inflation while maintaining stability in the foreign exchange rate. It only said the central bank and the government had taken some measures to do it and expected that monetary and fiscal authorities would have to come forward with appropriate remedial measures to tackle the situation.

Expressing hope is one thing and taking proper and appropriate and prudent measures are something different. If timely measures cannot be taken, the gloomy economic scenario will remain the same as we have seen since the 2021-22 fiscal year. Amid this gloomy economic picture and warning of taking immediate measures by the central Bank a majority of economists of World Economic Forum (WEF) said there was a hope for Bangladesh and India.

In their opinion Bangladesh and India can gain benefit out of the coming global recession and geopolitical tension by diversifying their manufacturing supplies chains away from China as the new reality will continue to reshape the global economy with further monetary tightening in the EU and US. The hope is there for Bangladesh because of the businesses’ relocation away from China. Bangladesh may increase its volume of exports to the Middle East, North Africa and South Asia.

While speaking to The Business Post, Snowtex Group Managing Director SM Khaled said: “We are already benefitting because of the diversification of the manufacturing supply chain away from China. China’s share has dropped to around 33 per cent from nearly 40 per cent. The figures show the real scenario. The US, EU and Japan are now choosing Bangladesh as their prime sourcing destination. If we look into the present export growth it is higher than our competitors. Apparel exports grew by 15.56 per cent to $23 billion in the first half of the FY23 while in the FY22 it stood at $42.61 billion with 35.47 per cent growth.”

If the prediction of the world economists is correct, then a credibly policy and road map for Bangladesh must be formulated to gain the new reality is going to offer us. Of course, the credible policy will include solution to the problems of power and energy supply crises. If this crisis can’t be overcome we can’t make the best use of the opportunity.

Former lead economist of the World Bank Dhaka Office Zahid Hussain said: “Here is a great opportunity for Bangladesh to gain, mostly from the clothing sector. But due to lack of predictable and credible policy, we may not be able to cash in on the opportunity to the fullest.”

On top of that, our infrastructure, shortage of skilled manpower and repatriations of investment returns must be ensured to get the country ready to grab the opportunity to face the challenge of predicted 2023 economic recession. Let’s be hopeful that our authorities concerned will take preemptive measures before it is too late.