The International Chamber of Commerce, Bangladesh (ICC,B) has said Bangladesh is already feeling the heat of the Russia-Ukraine war in many ways and if the war continues for a longer period, the impact will intensify.
Three major economic challenges, all tied to one another, as observed by experts include a persistent higher rate of inflation, the upward trend of the foreign exchange rate, and a deepening liquidity crunch in the banking sector, it said.
The country is feeling the impact through reduction in exports and rise in import bills.
Being an oil-importing country, Bangladesh is already feeling the pressure through high import payments, the ICC,B report cautioned.
It endorsed the recent recommendation by the Finance Ministry to avoid hard loans and discourage the import of luxury goods.
Read: Edible oil prices likely to drop in Bangladesh in line with global market: Commerce Minister
"This may reduce pressure on our declining foreign exchange reserves," said the leading chamber body on Saturday also endorsing recent austerity and regulatory measures taken by the government and Bangladesh Bank aimed at curbing non-essential imports, suspending the implementation of projects with high import components.
ICCB President Mahbubur Rahman said they believe this will send a positive signal to the market and the economy as well as curbing inflation.
He was presenting ICCB executive board report at its 27th annual council held in the city on Saturday.
ICC,B also supports the demand of the businesses not to increase the power and gas rates, fuels prices as well reduce the corporate rate taxes during the upcoming budget as these will be helpful in containing the inflation, said its President.
The report mentioned that over the last two years, the pandemic has played a major role in shaping the global economy.
Many sectors have found themselves in difficulty and are still struggling and the countries dependent on those sectors are now quietly trying to get back up again.
Despite the strong economic recovery in 2021, the financial difficulties are not over and may still cause economic slowdown.
In addition, many countries are faced with an increasing debt burden, high inflation and burning issues at the moment, geopolitical tensions, which all play a major role.
The global economy is poised to be sent on yet another unpredictable course by Russia-Ukraine war, said the ICC,B.
This war is a major humanitarian crisis affecting millions of people and a severe economic shock of uncertain duration and magnitude, it said.
The magnitude of the economic impact of the war is highly uncertain, and will depend in part on the duration of the war and the policy responses, but it is clear that the war will result in a substantial near-term drag on global growth and significantly stronger inflationary pressures, the report added.
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The report observed that the "Russian invasion" of Ukraine poses the most severe risk to developing Asia’s economic outlook.
The war is already affecting economies in the region through sharp increases in prices for commodities such as oil and has heightened instability in global financial markets.
COVID-19 continues to impact many parts of developing Asia, with some economies experiencing new surges in cases.
Bangladesh’s journey of 50 years since its independence in 1971 has been tremendous and to many it is a ‘land of impossible attainment’.
The dominant narrative of Bangladesh has been of an economic miracle, said ICC,B.
The country's impressive scorecard is built on her success in terms of attaining a consistently high pace of economic growth and an impressive performance with regard to various development indicators, including those relating to the Millennium Development Goals (MDGs), ICCB President said.
The success in economic growth has led to Bangladesh’s dual graduation-graduation from a Low-Income Country (LIC) to a Lower Middle-Income Country (LMIC) in 2015, according to the World Bank criterion and eligibility for graduation from the group of Least Developed Country (LDC) to Developing Country (DC) status in 2018, according to United Nations criteria, the report added.
Mahbubur Rahman said according to the World Economic Forum, since its founding in 1971, Bangladesh has emerged from overwhelming poverty to be proclaimed by The World Bank in 2020 as 'a model for poverty reduction'.
It achieved the highest cumulative GDP growth globally from 2010 to 2020 and is now on course to become a developed country by 2041.
Bangladesh, like other countries, faces the daunting challenge of fully recovering from the COVID-19 pandemic which has constrained economic activities and reversed some of the gains achieved in the last decade, according to ICC,B.
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