Bangladesh Bank (BB) is carefully advancing with an optimistic outlook as it strives to alleviate the economic strain caused by the US dollar crisis and soaring inflation, according to the central bank’s quarterly report on the economy. The report highlights the persisting pressure on the economy from external factors, including escalating commodity prices and supply disruptions resulting from the ongoing Russia-Ukraine conflict, global economic slowdown, and financial sector volatility.
The report emphasizes that the issue is linked to geopolitical conflicts and cannot be resolved overnight. Consequently, the report urges banks and other financial institutions to exercise prudence in their future financial plans.
Bangladesh Bank publishes such reports every quarter, providing updated data on the country’s overall economy.
As per the report, Bangladesh is currently grappling with geopolitical conflicts, which have yet to exert a direct negative impact on the economy. Nevertheless, the economy remains under pressure, necessitating cautious measures.
A significant portion of Bangladesh’s economy relies on the United States, Canada, and the European Union, which constitute the primary sources of foreign investment in the country. These regions also account for approximately 82% of Bangladesh’s exports.
Furthermore, 725 of imports originate from India and China, while a substantial portion of remittances flows from the United States. The ongoing geopolitical conflicts pose a risk to Bangladesh’s export earnings and remittances.
In the current geopolitical landscape characterized by tensions between China and the United States, Bangladesh remains prudent in its decision-making process concerning these two countries.
Additionally, the United States has been openly critical of Bangladesh regarding issues of democracy and human rights. Although Bangladesh aims to maintain good relations with all countries, it is not inclined to accept unwarranted criticism from the United States. Notably, Bangladesh’s export income to the United States experienced a decline of around 12% in the past year due to certain restrictions and recent changes in visa policies.
Previously, restrictions imposed by the US, coupled with the recent visa policy changes, redirected remittances from Bangladeshi nationals residing in the United States back to the country, resulting in a sudden surge in remittance inflows.
The report highlights that Bangladesh continues to face the adverse effects of soaring global prices and supply chain disruptions caused by the Russia-Ukraine conflict. The repercussions of these factors persist, along with the ongoing global economic slowdown that stems from the conflict’s impact. While instability in the financial sector has started to subside, the report indicates an increase in liquidity supply within banks.
The Central Bank expresses optimism that the situation will gradually improve in the forthcoming days.
