Shocks and setbacks, but economy stood tall

By and large, 2016 will go down as the year of shocks and setbacks, but the Bangladesh economy stood tall: it continued its steady growth.

The central bank reserve hacking and the terrorist attack in Gulshan were the two major incidents in what was otherwise a tranquil year.

A New Year always starts with unpredictability as the future is always mystery.

Many feared that the political landscape might heat up on the occasion of the second anniversary of January 5 general elections that some major parties boycotted.

But there was no commotion surrounding the date, which came as a huge sigh of relief to the ordinary people.

The cyber heist of Bangladesh Bank reserves in February though jolted the country out of the stupor.

But the real shock came on July 1, when a group of young militants stormed into an upscale restaurant in the heart of the capital's diplomatic zone and brutally murdered a number of foreigners and locals.

The incident raised fears that it would eat into the country's booming garment export business.

But the fears were soon quelled as the government took tough measures to root out militancy from the country.    

Towards the close of the year, Bangladesh Bureau of Statistics disclosed that the country's gross domestic product grew 7.11 percent in fiscal 2015-16, riding on double-digit growth of the industrial sector. However, some economists contested the figures.

There was consistency in agriculture production. Maintaining self-sufficiency in rice production was particularly notable given the total arable land available for farming is squeezing every year.

Exports, the driving force of the economy, surpassed expectations despite global slowdown and domestic challenges. The World Bank revealed that more people graduated from the poverty line.

The multilateral lender was so pleased with Bangladesh's achievements on poverty and hunger eradication that its president Jim Yong Kim himself came to Bangladesh to celebrate the End Poverty Day, which was introduced this year.

The WB updated Bangladesh's new poverty numbers at $1.90 per capita per day in the 2011 purchasing power parity prices. It showed the number of poor in Bangladesh is much lower, but the historical trend is the same.

The government took on a host of big projects, with one of them being the Payra seaport in Patuakhali. The third largest seaport is expected to lessen the burden on the already-constrained Chittagong port.

The Dhaka-Chittagong Highway and Dhaka-Mymensingh Highway opened to public after years of delays, both of which have cut the travel time by at least four hours.  The construction work for the first metro rail service in Dhaka has also kicked off.

The visit of Chinese President Xi Jinping was the most noteworthy as it took the bilateral relations between the two countries to a new height. 

China committed soft loans for more than two dozen large projects, particularly related to infrastructure, energy and connectivity.

If the projects come to fruition, they would change the face of the country's infrastructure. In monetary terms, Dhaka may receive between $21.5 billion and $24.45 billion in loans from Beijing.

Among other economic indicators, foreign currency reserves stood at $31.92 billion on December 21 -- enough to cover more than eight months of imports.

Inflation remained stable throughout the year and was much lower than the government's target. It declined to 5.38 percent in November, down from 5.57 percent in October this year and 6.05 percent in November last year.

The government has aimed to contain inflation to within 5.8 percent this fiscal year, but the increase in coarse rice price, largely consumed by the lower income groups, which make up the majority, was a dent for the government's effort to keep inflation in check.

Power generation capacity hit 15,000 megawatts as more and more power plants are added to the network under the government's massive efforts to bring the one-third of the population who still does not have access to grid power under the coverage.

However, the construction of transmission networks has not kept pace with the rate of generation capacity.

The government cut prices of petrol, octane, diesel, kerosene and furnace oil to pass on the benefits of lower petroleum prices in the global market to consumers.

People however expected major cuts as the price of oil in the international market hit the bottom in January before recovering some ground.

But the government has not gone for any steep decrease as it is unsure whether the move will prompt cuts in transport costs and the price may also rise in the international market.

The year will be marked as the beginning of the journey to achieve sustainable development goals, which must be met within the next 15 years.

On the downside, remittance inflow fell by more than 9 percent in the 11 months of 2016 to $12.65 billion due to low oil prices on the global market and transfer of money from abroad through illegal means.

The progress on making it easier to do business in the country has been slow. It was reflected in the World Bank's last ranking of the ease of doing business report.

Although Bangladesh has gone up two places, it ranks 176 among 190 economies, thanks to the snail-paced regulatory reforms.

Despite the relative calm in the political scenario, private investment has not picked up. It fact, it has been stagnant at around 22 percent of GDP for the past five years.

Binding constraints such as the high cost of doing business, difficulties of procuring land, high rates of corporate taxation, severe shortage of energy, the inefficiency of trade logistics and limited availability of skills have to be overcome to win over private investors.  

Although it is too early to say with certainty, Brexit and the election of Donald Trump as the US president might have negative implications for Bangladesh's export performance and remittance in the long-term if the rhetoric against free trade and migrant workers ahead of both the polling see the light of the day.

Both the US and the UK are major export destinations and Bangladeshis living in the two countries make up a significant chunk of remittance income.

Again, the onus will largely be on the government. If it can get over domestic challenges and maintain political stability then the country would be in a better position to offset any external challenges in 2017.