Uninterrupted energy needed at affordable prices

An uninterrupted energy supply and affordable pricing are necessary to maximise productivity and avoid exacerbating inflationary difficulties, said Md Sameer Sattar, president of the Dhaka Chamber of Commerce and Industry (DCCI).

"For a sustainable energy sector, the government needs to enhance its investment in energy sourcing from diversified sources, apart from traditional sourcing destinations like Gulf Cooperation Council countries and Organisation of the Petroleum Exporting Countries."

He made the comments while sharing his expectations in the new fiscal year 2023-24, which began on July 1.

To enhance remittance inflow, the government needs to provide incentives to remitters to encourage them to send money through formal channels and ensure sending of skilled manpower abroad and cordial treatment of migrant workers at airports, according to Sattar.

Support for industrial inputs and restriction on luxury imports are necessary to diversify exports, he said.

He said Bangladesh consistently witnessed 6 per cent plus economic growth on average over the past decade before the coronavirus pandemic hit.

While the economy was recovering from the headwinds caused by the pandemic, the Russia-Ukraine war adversely affected the global supply and trade systems. The resultant supply crunch, price hikes and inflation hurt both developed and developing economies, including Bangladesh. 

Still, Bangladesh managed to project a growth of 6.03 per cent in the just-concluded fiscal year but various macroeconomic challenges emanating from global uncertainties are hurting the country's progress in many ways. 

In FY2023, declining international trade and foreign exchange reserves were the two major economic challenges that significantly affected the economy.

The consistent fluctuation in exchange rates and import of expensive raw materials used by export-oriented industries created challenges for the country's international trading system and resulted in a series of disruptions in the economy, exposing the local supply chain and businesses to damages.

Due to the global energy supply crunch, the government raised the prices of petroleum products by up to 51.7 per cent and increased power and gas prices as well.

"The increase in energy prices hampered the overall business ecosystem," said Sattar.

Despite the global crisis, the entrepreneur said, Bangladesh achieved some major milestones during FY2023. The long-awaited Padma bridge opened in June of 2022 which is estimated to boost the country's annual GDP by 1.23 per cent.

"The opening of the country's first metro rail in December last year added a new mode of public transport to Dhaka city which is expected to ease traffic congestion and spur economic activity."

He said the current inflationary pressure is expected to continue in the new fiscal year and even might worsen.

"As higher inflation impacts the cost of doing business and raises living expenses, it can undermine overall economic performance."

He said inflation needs to be tackled by adjusting the repurchase agreement rate and the reverse repo rate.

"In addition, strong market monitoring is required to tame inflation with the engagement of stakeholders. In order to bring stability in the foreign exchange market, strong monitoring should be in place by the Bangladesh Bank."

He expects the economy to return to its pre-pandemic growth trajectory in FY24 if the aforesaid measures are seriously considered.