The two major foreign exchange earning sources of Bangladesh- exports and remittances - fell in October due to slowdown in the global economy, which economists feared may pose new challenges for the country’s economy.
They said drop in exports means imports will be down at the same time. Though less imports may bring some slightly lessen the pressure on foreign currency reserves, the overall impact on economy won’t be good.
Professor Mustafijur Rahman, a distinguished fellow of think tank Centre for Policy Dialogue (CPD) told UNB that the domestic economy is closely related to the ups and downs of the global economy. So Bangladesh’s economy will definitely be affected by the new recession in the US and EU countries.
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Bangladesh should focus on increasing the flow of inward remittance as it will be a good source of foreign exchange earnings at this time.
Mustafij suggested increasing domestic resource mobilization and focusing on food production, which will help the economy to be resilient during the recession.
Dr Mohammad Abdur Razzaque, an economist specializing in applied international trade, told UNB said export earnings will not grow as the recession prevails in the US and EU markets.
He hinted that the domestic economy, including export and remittance targets would not be achieved considering the present situation.
“Our foreign exchange would not be affected severely as the demand for import is falling in the line of export, and the government should focus policy to save forex by cutting projects expenditure,” he added.
Bangladesh exported goods and services worth USD $4.356 billion in October due to the slowdown in the global economy and for adverse impact Ukraine-Russia war.
It shows the export earnings fell by 7.85 percent to USD $4.356 billion year-on-year in October. The export volume of October, in last fiscal year was $4.727 billion. It means the export income fell by 7.65 percent.
The export promotion bureau (EPB) published the export data of October on Wednesday (November 2).
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As a result, after the last 13 consecutive months of growth in export earnings, in September and October this year, export earnings decreased for two consecutive months compared to the previous year.
Meanwhile, 12.87 percent of export income decreased in October 2022 beyond the target of the government.
The government's target for export earnings this month was USD $5 billion, whereas the country exported $4.356 billion. That is a fall by $64.33 crore. It is about a 12.87 percent fall.
People familiar with the development said that the export income of Bangladesh has started to decrease due to the shock of the Russia-Ukraine war.
Inflation has increased abnormally in the United States and European countries. Because of this, they have reduced the purchase of clothes. They have to spend a lot on food, which impacted Bangladesh’s export income.
However, traders, including ready-made garment owners, were already expressing apprehensions that purchase orders from the US and European markets would decrease for the new recession that was caused by the Russia-Ukraine war.
The inward remittance inflow to Bangladesh declined by 7.4 percent in October to USD $1.52 billion compared to the same month of last year. It is the lowest in last 8 months.