Amidst a backdrop of formidable challenges, including soaring inflation, depleting forex reserves and escalating debt burdens, experts on Sunday called upon the government to adopt a comprehensive, long-term strategy to navigate these issues and rejuvenate the economy.
These insights emerged from a roundtable discussion titled "State of the Global, Regional, and Bangladesh Economic Outlook," organised by the Mastercard Economic Institute (MEI) at the Sheraton Dhaka hotel on Sunday.
The keynote paper was presented by David Mann, chief economist for Asia Pacific and MEA at Mastercard MEI, while Syed Mohammad Kamal, country manager of Mastercard, facilitated the event as the moderator.
David Mann underscored that post-Covid-19 challenges, such as high inflation, forex volatility, and mounting debt burdens, have inflicted significant impacts on emerging markets, especially those grappling with twin deficits.
He highlighted how the rising costs of essentials have reduced discretionary spending on non-essential items, while expenditures on experiences have outperformed purchases of tangible goods.
He emphasised the importance of bolstering household balance sheets and labour markets to provide a buffer against consumption shocks, noting that households have started depleting their surplus savings. Mann further attributed the high inflation rates to supply chain disruptions, particularly influenced by the Russia-Ukraine conflict.
He explained that Russia and Ukraine are major global suppliers of commodities, with Russia exporting 16.42% of the global wheat market in 2019.
He said risks of commodity-driven inflation persist due to extreme weather events and oil price fluctuations, with inflation permeating from energy markets to broader economic sectors.
He also noted that sovereign debt vulnerability escalated due to imported inflation and currency risks, leading to a decrease in forex reserves and prompting certain nations to restrict imports.
Mann also emphasised the significance of exchange rates for many countries, while global trade faces headwinds affecting export-oriented economies. Remittances play a crucial role in the current account, especially amid deteriorating terms of trade.
Mann stressed the importance of financial inclusion, technology adoption, and formalising informal sectors.
Dr Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, acknowledged the government's efforts to address challenges but stressed that they are insufficient and called for a more comprehensive, long-term strategy.
Edimon Ginting, country director of the Asian Development Bank in Bangladesh, highlighted the country's economic diversification but noted some investment imbalances.
He suggested that substantial policy reforms could attract increased foreign direct investment.
Mamun Rashid, managing director of PricewaterhouseCoopers (PwC), Dr Muhammad A (Rumee) Ali, former deputy governor of Bangladesh Bank and CEO of the Bangladesh International Arbitration Centre (BIAC), and other distinguished figures also contributed to the discussions.
Development partners, the heads of Mastercard partner banks, fintech organisations in Bangladesh, and other industry leaders attended the event, aiming to collectively address the multifaceted challenges and steer Bangladesh's economy towards a more resilient future.
