Recession coming in Bangladesh
Social security program should be increased
Industry Desk: The fear of global recession has been expressed by the World Bank in next year. In the meantime, the impact of the recession has started to fall in Bangladesh as well. Inflation has also increased along with the increase in the prices of various daily necessities. There is a strong fear of negative impact on the growth of export earnings. Prime Minister Sheikh Hasina has recently spoken about the possibility of recession and famine in several speeches.
The Prime Minister advised not to waste food and increase food production. In this situation, economists are suggesting to increase the social security program to ensure the food security of the low-income people.
They say that the issue of global recession is not in the hands of Bangladesh. This is the global situation. Bangladesh has no chance to escape recession alone. The impact of the recession has already started to take its toll. Low-income people are the most affected in such situations. The number of people living below the poverty line has increased in the country due to various reasons. As a result, social security programs should be accelerated to ensure people’s food security. Necessary steps should be taken in this regard from now.
Economists also say that export earnings may decrease in the coming days due to the impact of recession. However, in this case, there will not be a big impact on the export income of Bangladesh. Because, relatively low value essential products are exported from Bangladesh. Still, new export markets must be sought. At the same time, the incentives of the export sector should be continued. If necessary, it should be increased in special cases.
Recently, the fear of global recession in 2023 has been expressed by the World Bank. The World Bank’s analysis under the title ‘Is the World Recession Coming’ has said that the pace of the economy is the slowest since 1970. Growth in the world’s largest economies, the United States, China and Europe, is slowing down. Its impact could turn into a recession next year.
The World Bank says central banks must take concerted action. Inflation in the United States and European countries has risen to levels not seen in the past 40 years. After the outbreak of Corona began to decrease, the demand in the global market started to increase. But due to the impact of the war in Ukraine, the price of fuel and food has increased a lot. To counter this effect, policy interest rates are being raised to rein in demand. The tendency to raise interest rates is slowing down the economy.
Meanwhile, the Food and Agriculture Organization of the United Nations (FAO) and the World Food Program (WFP) have already warned that by 2023, 45 countries in the world could face acute food shortages and 200 million people would need emergency aid. According to the joint report of FAO and WFP, the risk of famine is high in various African countries.
Prime Minister Sheikh Hasina has been talking about the possibility of recession and famine in her various speeches for the past few weeks. Prime Minister Sheikh Hasina said in a function organized on the occasion of ‘World Food Day 2022’ last October 17, ‘I request once again not to waste any food, to increase food production by bringing under cultivation whatever land there is. Protect Bangladesh from the calamities we are witnessing all over the world. I believe it can be done with everyone’s efforts.
Earlier, in the opening speech of the Executive Committee of the National Economic Council (ECNEC) on October 11, the Prime Minister said, “…I have spoken to many world leaders and heads of organizations during my recent visit to the United Kingdom and the United States.” Everyone was very concerned about this issue (food security). They think that 2023 will be a very terrible year. There may be food shortage and famine in this year.
What kind of steps Bangladesh needs to take in view of the strong fear of global recession being expressed. On behalf of, such a question was put to eminent economist and former caretaker government’s finance advisor AB Mirza Azizul Islam.In reply, he said, the effects of the recession have already started to fall. Various international institutions have reduced our Gross Domestic Product (GDP) rate. Yet there are still estimates of 6 percent or more.
But other reasons have increased the number of people living below the poverty line. The provision of social safety net should be increased for them and measures should be taken to ensure that the allocation for social security is distributed fairly. The government is trying. About one crore people are being supplied with products through TCB. It should be ensured that it is distributed fairly’ – said Mirza Azizul Islam.
He said, we have some problems abroad. Export growth has slowed. Remittance flows also declined. Now because of the agreement with Malaysia, it may increase. It is time consuming though. Inflation is going on around the world. Inflation has gone above 10 percent in some developed countries. This reduces the purchasing power of consumers. So there seems to be a hit in the export sector. On the other hand, the reserve has also decreased a lot. If export sector growth does not recover, reserves are likely to fall further.
This will reduce the exchange rate of the money, creating local pressure on inflation. However, another economist thinks that the country’s export income will not be very big, the former governor of Bangladesh Bank Dr.Atiur Rahman said.
He told, “We don’t think there will be much impact on our export sector.” Because exports have increased in the United States in the last 7-8 months. Our exports to Europe have increased by almost 40 percent. The products we provide are relatively cheap. Our export products are also bought by low-income people abroad. But we have to find new markets and continue the incentives we give to the export sector. If possible, it should be increased in some cases.
Economist said that there will not be a big blow to the export sector. Economist ZyedBakhat, who served as the chairman of Agrani Bank, told, “Our exports may be affected a little, but it will not be a big hit.” Because our exports are generally basic commodities, we don’t manufacture very high-end products. During the global recession of 2008-09, our exports did not suffer much. We manufacture basic items as per market demand.
The two economists said that even if there is no major impact on exports, there may be an impact on low-income people. For this reason, they also suggested to increase the social security program.
In this regard, Atiur Rahman said, the talk of feeding one crore families, I think it should be increased. Especially the inclusion of garment workers in this program. They will carry a bag of food on their way home from the factory and pay for that food on their mobile. Owner can share it if needed. In this way, we have to think of tackling the food situation in an innovative way from now on.
But I’m not that scared. Because the agriculture of Bangladesh has undergone a great change. I think we can handle the food situation. However, the monitoring of the food that is being given to one crore families through TCB should be increased and this number should also be increased – said the former governor of Bangladesh Bank.
In his words – we were already getting glimpses of the Great Depression. More and more are available now. Because the growth in the United Kingdom, the United States and European countries is decreasing.
He also said, World Bank, IMF says our growth will be above 6 percent. The government expects over 7. 6 percent is not bad in times of crisis. If you think from this point of view, our situation is not so bad. The pressure of recession is definitely falling. Especially due to natural calamities some places inside the country are under pressure. But if we can do agricultural production properly, there won’t be much problem.
The economist said that the Prime Minister’s warning message is very timely. He mainly talked about the world food situation. We have to import a large part of our food. The dollar is rising and the war situation is not easily controlled. Due to this, the import price of wheat, edible oil is increasing. Again, it is becoming very difficult to get them through LC. That is why the Prime Minister has warned that even an inch of land should not fall in the country.
Economist Dr. Zyed Bakht told, if the war does not stop, it is one situation, if it stops, it is another situation. It is completely out of our control. What needs to be done inside the country is to strengthen the social security of the poor people. Because the impact is more on them. Inflation says, loss of employment says the impact is more on them. So, they should be brought under social security. Especially useful products should be provided to them.
He said to the common people, they have to be patient. It is an international process. The government is doing everything it needs to do. It is not okay to get excited or use the situation politically. Everyone needs to cut unnecessary expenses.
Dr. Atiur Rahman also said that ordinary people should spend according to their income. Don’t panic. Unnecessary expenses should be reduced.
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