Shift from China to benefit Bangladesh

Bangladesh is among the countries that may benefit from global trends such as the diversification of manufacturing supply chains away from China, according to a report of the World Economic Forum (WEF).    

The Chief Economists Outlook was released on the opening day of the WEF's Annual Meeting on Monday. The meeting is taking place at the Davos Congress Centre in the Alpine resort of Davos, Switzerland.

The briefing builds on the latest policy development research as well as consultations and surveys with leading chief economists from both the public and private sectors, organised by the WEF's Centre for the New Economy and Society. The survey was conducted in November and December.

According to the survey, the two strongest regions in 2023 are the Middle East and North Africa and South Asia.

In South Asia, 85 per cent of respondents expect moderate or strong growth, a modest improvement since the September edition.

"Some economies in the region, including Bangladesh and India, may benefit from global trends such as a diversification of manufacturing supply chains away from China," said the WEF report.

"Some economies in the region, including Bangladesh and India, may benefit from global trends such as a diversification of manufacturing supply chains away from China."

It comes out amid continuing economic uncertainty and policy challenges of historic proportions. Although there are some grounds for optimism, such as easing inflationary pressures, many aspects of the outlook remain gloomy.

Almost two-thirds of respondents consider a global recession to be likely in 2023, including 18 per cent who consider it extremely likely, more than twice as many as in the previous survey in September.

However, views are divergent, with a third of respondents considering a global recession to be unlikely this year. Regionally, the situation in Europe and the US is now stark, with 100 per cent of chief economists expecting weak or very weak growth for 2023 in the former and 91 per cent in the latter.

Following a year of sharp and coordinated central bank tightening, the chief economists surveyed expect the monetary policy stance to remain constant in most of the world this year.

However, a majority of respondents expect further tightening in Europe and the US, 59 per cent and 55 per cent, respectively.

At the start of 2023, concerns about the cost of living remain acute in many countries. Yet, survey respondents indicate that the cost-of-living crisis may be close to its peak, with a majority, or 68 per cent, expecting the crisis to have become less severe by the end of 2023.

"A similar trend is evident in the energy crisis, with almost two-thirds of respondents optimistic that conditions will have begun to improve by the end of the year," the WEF said.

Around nine out of 10 respondents expect both weak demand and high borrowing costs to exert a significant drag on business activity in 2023, with more than 60 per cent also expecting higher input costs to be a significant factor.

In response to these challenges, most chief economists expect multinational businesses to cut costs this year, with 86 per cent of respondents saying they expect businesses to cut operational expenses and 78 per cent expecting workers to be laid off.

More than three-quarters of respondents also expect businesses to optimise their supply chains, said the WEF.

The survey also asked chief economists to highlight any sources of optimism in the current global economic context. Three factors were mentioned repeatedly: the strength of household balance sheets, the peaking of inflation and the resilience of labour markets.

Respondents also highlighted the prospects of a rebound in China following the shift away from zero-Covid policies, as well as economic opportunities in the energy transition, relative resilience in some emerging markets and continued workplace flexibility for knowledge workers.