More efforts needed to stabilise economy

More actions are needed to stabilise the foreign exchange reserve, ease inflation, enhance government revenue, ensure adequate fuel and power for industrial activities, and extend social safety net programmes in Bangladesh, according to a leading trade body.

The government had taken decisive measures to address the fallouts of Covid-19 and the ongoing Russia-Ukraine war, but further initiatives are needed considering the current economic situation.

The gross foreign exchange reserve fell by about 25 percent year-on-year to $31.20 billion as of June this year, shows an economic review by the Metropolitan Chamber of Commerce and Industry (MCCI).

Meanwhile, the 12-month average inflation rate stood at 9.02 percent in the previous fiscal year (FY) while it was 6.15 percent in FY22.

Additionally, net foreign direct investment decreased 11.82 percent year-on-year to $1,611 million, the MCCI said in its review for the April-June quarter of FY23 released yesterday.

The MCCI said unemployment and low investment are among other challenges facing the country.

The economy showed some signs of improvement in the quarter under review with exports and imports, two important drivers of the economy, having fared comparatively well amid the present situation.

And although the foreign exchange reserve is still in a somewhat satisfactory position, it is heading in a downward trajectory following notable depreciations of the local currency in recent months.

Besides, Bangladesh's robust recovery from the Covid-19 pandemic has been interrupted by the Russia-Ukraine war, which resulted in supply-chain disruptions, hikes in global commodity prices and reduced external demand.

Weaker remittance inflow, shortfalls in revenue collection, slow public expenditure, higher inflation and a widening current account deficit also contributed to the declining foreign exchange reserve.

The MCCI said unemployment and low investment are among other challenges facing the country.

As per the review, the performances of selected economic indicators are mixed.

As such, exports may register a decline in July due to the comparatively lower growth of apparel exports. However, it may increase in the next two months, the report said.

Similarly, imports may increase slowly during the January-March period of the current fiscal year.

The foreign exchange reserve will also likely rise during the January-March period of FY24 while inflation can be expected to go down slightly at the same time, the MCCI added.