The economy is under pressure due to challenges caused by global and domestic factors, that are apprehended to continue for some time in view of slower growth in the world economy.
This view was put forward in the Independent Review of Bangladesh’s Development (IRBD) conducted by Centre for Policy Dialogue (CPD), a private think tank, released in a media briefing in the capital on Sunday.
Dr Fahmida Khatun, executive director of CPD, briefed the reporters on the review report. Dr Mustafizur Rahman, distinguish fellow, Khondaker Golam Moazzem, research director, and Towfiqul Islam Khan, senior research fellow, among others, spoke on the review report.
CPD carries out an interim review of the national economy towards the end of every fiscal year. Accordingly, the third interim review of Bangladesh’s macroeconomic performance for FY22 has been undertaken.
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The average cost of living on a “regular” diet for one household of 4 persons living in an apartment with one bedroom outside the city centre in Dhaka in May 2022 would be approximately BDT 42,548, the review said.
The review found that higher living costs in the capital are pushing up inflation.
The average cost of living on a “compromised” diet for one household of 4 persons living in an apartment with one bedroom outside the city centre in Dhaka in May 2022 would be approximately BDT 29,206. The difference goes to show the impact of food inflation in particular on ordinary families.
Apart from the high price of basic food items, the high prices of non-food items were putting a huge burden on households. Available data shows that maintaining even a modest standard of living was becoming prohibitively expensive for households in Dhaka.
In the absence of support from the government, out-of-pocket expenditure on health for a household of 4 persons was equivalent to Tk 2,625 per month in 2019, at purchasing power parity, said CPD.
It is apprehended that many households are at risk of falling below the poverty line due to out-of-pocket expenditure on health, CPD predicted.
“This is worrisome for the overall macroeconomic situation and it requires proactive measures by the policymakers both in the immediate and medium terms,” the CPD study recommended.
The quality, reliability and consistency of data of economic indicators will be the first step towards enacting proactive measures since the effectiveness of policy making depends on credible real time data.
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Policymakers will have to come out of growth obsession and focus on the quality of growth in terms of distribution of the benefits of growth more equally.
Since the poor and disadvantaged people are yet to overcome the impact of the pandemic and have been affected further due to high prices of essential commodities, the policy should protect the purchasing power of the poor and low-income groups, the study said.
CPD has been proposing various measures to ease the burden of rising prices and shrinking purchasing power of low- and fixed-income earning people including selectively reducing taxes at import and domestic stages and expanding social protection.
Besides, strategic sectors such as energy and agriculture will have to be supported through subsidies for economic growth and food security.
These measures should be combined with higher efforts for domestic resource mobilisation and reduced unnecessary and less important expenditures.
In the FY23 budget, fiscal measures pertaining to the external sector should focus on addressing the adverse impacts of imported inflation, CPD said.