More govt steps needed to manage inflation: MCCI

The government needs to take more steps to bring stability in the foreign exchange reserve, manage inflation, enhance revenue earnings, ensure proper electricity and gas supply for economic activities and expand social safety net programmes. 

The suggestion came from the Metropolitan Chamber of Commerce and Industry (MCCI) in its quarterly economic review for the January-March quarter of the current fiscal year yesterday.

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Foreign currency reserves are still somewhat in a satisfactory position but into a weaker trajectory, the chamber said.

The exchange rate had long remained stable but depreciated notably in recent months although the government took some quick and decisive measures addressing the economic fallout, it said.

The chamber said Bangladesh's economy, among the fastest-growing ones in the Asia-Pacific region, faces some challenges.

Robust economic recovery from the pandemic has been interrupted by the Russia-Ukraine war, recent price rise of essential commodities, weak remittance inflow, shortfall in revenue collection and slow public expenditure, it said.

Widening of Bangladesh's current account deficit, depreciation of the taka and a decline in foreign exchange reserves are also some of the main challenges, it added.

The unemployment situation and low investment are other challenges, the chamber said, adding that a significant increase in public and private investment was necessary to maintain competitiveness and generate further growth.

Nevertheless, the economy has been showing some signs of improvement in the quarter under review, it said.

Exports and imports are two important drivers of the economy, and amid the pandemic and Russia-Ukraine war, both areas have done comparatively well, said the chamber.

Regarding the performance of the agriculture sector, it said there were favourable natural factors and strong government support in terms of timely availability of inputs and finance.

The sector achieved a lower growth rate of 2.61 per cent in FY23 than in FY22 when the sector grew at 3.05 per cent, it said.

Regarding the industrial sector, the MCCI said in the broad industry sector, the manufacturing sub-sector registered a growth of 9.23 per cent in FY23, compared to 11.41 per cent of the previous fiscal year.

On the other hand, the share of small, medium and micro industry in GDP increased to 7.57 per cent from 7.33 per cent while that of cottage industry also increased to 4.38 per cent in FY23 from 4.21 per cent in FY22, the quarterly review also said.

According to the Bangladesh Power Development Board's (BPDB) website, the power plants generated 10,798 MW of electricity against a maximum demand for 10,794 MW at the sub-station end (evening peak) on March 31.

During the quarter under review, a maximum of 12,921 MW was generated, recorded on March 13.

Besides, once again the government raised power price with effect from March 1, by around 5 per cent for retail consumers, apparently to cope with high generation cost incurred by power plants.

With this latest one the government raised electricity tariffs thrice over the past three months -- January, February and March -- seemingly in execution of a prior announcement about readjusting power tariffs every month.

The government also raised bulk electricity tariffs by up to 7.36 per cent across the board with effect from February 1, the MCCI said.