THE interim government has been in power for almost three months. If this government stayed only for three months, it would not need to worry about the economy. But it appears to be in office for some time more and it needs to focus on urgent matters of the economy. The main task of this government is to maintain the economy in a minimum healthy state, besides reforming the state as much as possible, guaranteeing rights and completing inclusive and impartial elections.
The World Bank predicts the lowest economic growth since the Covid outbreak in the ongoing financial year and the economy is losing momentum. Analysing various indicators, it can be seen that the economic activities have slowed down in a few months. The government should pay early attention to the uncertainties that have been created in the economy. The recent South Asia Development Update of the World Bank says that 4 per cent growth can be achieved in Bangladesh this financial year. But this is the mid-point of the growth forecast. According to the report, if the economy does not run properly, the growth may decrease to 3.2 per cent and if it does very well, it will be a maximum of 5.2 per cent.听
According to the World Bank, there are two things that can be a negative regulator in Bangladesh鈥檚 economy this financial year. Investment and industrial growth will be weak because of uncertainty. Another issue was flooding, which limited growth in the agricultural sector. Becuase of this, the economic growth will overall decrease, which was 5.2 per cent in the past financial year. The biggest obstacle in the way of the economy now is uncertainty.
If the uncertainty cannot be overcome, businesspeope will not make investments. Investors would sit idly by in uncertainty. So, the government has to try and take steps to overcome the uncertainty. This uncertainty has been created from three sources. First, the decline in law and order, which is disrupting industrial production and the decline continues despite a tripartite compromise between owners, workers and the government. Second, the weakness of the financial sector, which is hurting business. Third, the long-standing problems of the energy sector.
The recent slowdown in the economy is not, however, sudden. It is inherited. According to the World Bank, Bangladesh鈥檚 growth in the 2023 financial year was 5.8 per cent. This means that the economy started to slow down in the past financial year, which may further slow down this financial year. The three main sectors of the economy 鈥� agriculture, remittances and apparel 鈥� are more or less struggling. Capital should be provided for agriculture and small industries. It should be ensured that there is no shortage of fertiliser. It should also be ensured that worker鈥檚 travel abroad is not hindered in any way while the authorities need to adequately address the problems in the apparel industry.
Inflation has, meanwhile, been a major problem, affecting the economy and millions of low-income people. It is said that inflation has eased. But it is still at a dangerous level. However, some steps have been taken. The governor Bangladesh Bank also appears active. The central bank has raised interest rates several times, which is likely to contain inflation., But the investment will decrease. More than a half of the 60 banks have excess liquidity, indicating poor appetite for investments. Market control by busting syndicates and stopping extortion could curb inflation. But it appears that such issues have not been adequately attended. Inflation in Bangladesh is now largely institutional, not economic. Eliminating extortion and syndicates is not only a matter of domestic affairs but it also has economic benefits.
In the World Bank鈥檚 Bangladesh Development Update, the four challenges identified for the economy are inflation; external sector pressures, mainly because of lower reserves than required; weaknesses in the financial sector, which the central bank is now working to address; and, political uncertainty.
The government needs to make the right decision on this matter. If the uncertainties can be overcome quickly and the nature is on our side, a little more than 5 per cent growth can be achieved in the ongoing financial year. But before that, the government has to make decisions on the basis of priority regarding the urgent matters. A road map should. Accordingly, be drawn.
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Md Sahidul Islam Sumon is a columnist and economic analyst.