Resolving political crisis key to keeping economy afloat

Bangladesh has been navigating through troubled waters with the economy suffering one blow after another, from the Covid-19 crisis to Russia-Ukraine war, but the looming political turmoil centring on BNP’s rally is threatening to put the country past a tipping point.

The industry leaders have expressed serious concerns regarding the ongoing political crisis, and sought a peaceful resolution through all-party participatory discussion, so that they can keep the wheels of industries turning, and retain the hard-earned economic growth.

Speaking to The Business Post, Dhaka Chamber of Commerce & Industry (DCCI) President Rizwan Rahman said, “The government should not do anything that triggers panic. Meanwhile, the BNP must refrain from actions that can cause the economy to lag behind.

“Both sides need to engage in dialogue for a solution. Bangladesh has grown. It is no longer the country it was before. Bangladesh is now a $500b economy, so holding peaceful polls should not be a challenge, if there is goodwill.”

Apparel exporters have pointed out that export orders are not increasing as much as before due to the recession that hit Europe and America following the Covid-19 crisis, and global inflation caused by Russia’s invasion of Ukraine.

‘Exports will be severely impacted’

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “If the political conflict continues, exports will be severely impacted.

“Any business needs a stable situation to operate optimally, more so in case of exports. With the upcoming polls, the ruling party and BNP must come to an understanding so that factories are not shut and exports are not affected.”

A number of industry leaders say the country enjoyed relative peace for the last five years. If the ongoing political conflict goes on, local businesses and the economy will suffer, and the country will step backwards.

Former president of DCCI Abul Kasem Khan said, “If the situation worsens, the country’s economy will be under more pressure. Politics should stay in the political arena, and we do not want the type of politics that damages our economy.”

Before the Covid-19 crisis hit Bangladesh, the country’s Gross Domestic Product (GDP) growth during FY19 reached the highest in history at 7.88 per cent. In the next FY, the growth fell to 3.45 per cent due to the pandemic shock.

Just when Bangladesh’s economy was trying to recover from the pandemic shock, Russia’s invasion of Ukraine triggered a USD shortage and skyrocketing inflation. Despite the circumstances, Bangladesh’s GDP growth in the last two FYs rebounded to average 7 per cent.

‘No alternative to political stability’

Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) former president Abdul Matlub Ahmad said, “There is no alternative to political stability for maintaining the country’s GDP growth.

I am optimistic that the ongoing situation will not continue for long, and will be resolved soon.

“The political parties are working for Bangladesh’s best interest, and they will not push the country into instability. Prime Minister Sheikh Hasina will take Bangladesh forward while ensuring political stability.”

It should be noted that due to the price hike of goods in the international market, import costs have jumped, causing a USD shortage in Bangladesh. This crisis prevented the country from importing fuel oil and gas as per demand, which brought on mandatory load shedding.

Moreover, in a bid to curb the steady decline of forex reserves, the authorities put in place restrictions to discourage imports. This prevented industries from importing intermediary goods as per demand.

The power and USD shortage disrupted industrial production across the country. Despite import restrictions and austerity measures by the government, Bangladesh’s usable reserves now stand at around $26 billion.

In such a situation, industry leaders say the political conflict will worsen the on-going economic crisis, causing further losses to small and medium businesses, and marginalised people.

‘Put the country’s best interests first’

FBCCI Matlub Ahmad said, “The environment is not always the same. Bangladesh is not what it was 15 years ago. Not only the businessmen, but all the parties must put the country’s best interests first.

The country will progress only if the country is peaceful.”

The USD crisis is persisting because the exports and remittance inflow is growing on par with the imports. Bangladesh’s export growth was 8 per cent and remittance growth was only 2 per cent during July-October period of FY23, when compared year-on-year.

BGMEA President Faruque Hassan said, “If our exports are negatively impacted, workers may not get their salaries and allowances in time.

If this happens, it will have severe social effects.

“If this crisis continues, Bangladesh’s export order volume will decrease, and go to neighbouring countries such as Vietnam. Once export orders are gone, it becomes very difficult to bring those back.”