‘Bangladesh facing biggest macroeconomic challenge in a decade’

The country is facing the biggest macroeconomic challenge in the last one decade, said Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem).

The International Monetary Fund is predicting that the world is moving towards a recession, he said.

Bangladesh is still recovering from the supply chain disruption occurred during the Covid-19 pandemic, he added.

There is an inflationary pressure and the marginalised people are suffering almost double hardship than the government data suggests, he said.

He was speaking at a roundtable titled "Where is the economy heading towards and the next budget" organised by Daily Prothom Alo at its office in Dhaka today.

There is a notion that the soaring inflation was the reason of a rise in demand after the recovery of coronavirus pandemic, Raihan said, adding that he believes the supply chain disruption is causing the inflation.

The exchange rate of the taka against the US dollar was an area of relief in the last one year with ample supply of dollar in the market, but that comfort also diminished with the recent crisis in the sector, he said.

"The depreciation of the taka against the US dollar cannot be hold off forcefully. It needs a gradual adjustment."

The difference between official and unofficial exchange rates of the taka against the US dollar will boost hundi, he said.

"We must think about how long we will rely on remittance and garments as drivers of our economy as both things depend on the existing condition of other markets."

"We are not under pressure like Sri Lanka in terms of debt management."

But Bangladesh must be alert since many of the country's mega projects are financed by foreign debt and these may suffer for cost and time overrun and lack of feasibility study, he said.

"We want to see some mega projects in education, health and social safety net sectors," he said.