Year in review: Bangladesh economy in 2015

The World Bank says Bangladesh is a lower-middle income state and is being lauded by several global forums for its ‘stability’ in the macroeconomic scenario while public servants’ pay has been doubled.

But how much did the Bangladesh economy really gain in 2015?

The slump in global oil prices helped the government in controlling inflation while export figures in late 2015 brought a respite.

The beginning of the year was marred by dreadful incidents of firebombing on vehicles, killing over 100 people in the first three months.

The rest of the year, however, experienced stability in the political arena, creating a favourable atmosphere for the economy.

AB Mirza Azizul Islam

But still Bangladesh has not been able to get a grip on its trade and economic targets in 2015, says former caretaker government finance advisor AB Mirza Azizul Islam.

“I would say it’s the same as in the previous year. Nothing much happened,” is how he describes the economy in 2015.

The 10th national elections were held last year. The Bangladesh economy more or less experienced a peaceful 2014, apart from a dearth in investment.

Throughout 2015, the economic indicators have not seen any major drop, but matters like poor progress in some sectors have slowed growth, Mirza Aziz said while speaking to bdnews24.com. 

Remittance inflow, which grew by 8 percent in the previous fiscal (2014-15), has hit a snag. It registered 7.32 percent growth between July and November this year.

Mirza Aziz believes that it will be tough for Bangladesh to retain the 7 percent growth in export observed till now by the end of the ongoing 2015-16 fiscal.

Private sector credit flow has also taken a hit, as the country is far behind in its goal of achieving the target of more than 16 percent set in monetary policy.

Industries are not doing well, which is evident from the drop in imports of raw material and capital machineries.

Considering these, former finance advisor Mirza Aziz does not find the investment scenario in 2015 to be ‘encouraging’.

“Chances are little that the targets set for the 2015-16 fiscal will be achieved, which will leave an impact on the goals for the Seventh Five-Year Plan,” he said.

Gains from oil price slump

Some other economic indicators are doing well, however, depending on the external factor of dwindling oil prices.

With prices as low as $35 a barrel, Bangladesh is saving a huge amount in imports. It now does not have to subsidise it but rather counts profits.

For the same reason, the forex reserve is now over $27 billion.

Adequate farm output over the last few years has ‘benefitted’ the economy, according to Mirza Aziz.

“It can be said that the respite in the Bangladesh economy is due to the low cost of oil imports. This is what is enabling the government to fund large projects like the Padma Bridge,” he added.

Investment

Public sector investment in Bangladesh takes place mostly through the Annual Development Programme (ADP).

But its implementation in the first five months of the current fiscal has been a meagre 17 percent, much lower than in the same period in the last two fiscals.

In 2014-15, it was at 20 percent, and during the previous fiscal year 19 percent.

The government, however, blamed heavy rains between July and September for the decline.

“Incessant rains in the first three months (of the fiscal) hampered development projects,” Planning Minister AHM Mustafa Kamal had told the media.

He added that implementation would pick up from January next year.

Meanwhile, private sector credit inflow was at 13.19 percent in the first four months of the last fiscal.

It’s more or less at the same rate—13.22 percent during the same period in this fiscal.

Inflation

One of the key economic indicators was at a tolerable level throughout the year.

On a point-to-point basis, inflation came down to 6.05 percent in November from 6.19 percent in October.

This means that services or goods, which cost Tk 100 in November last year, will now cost Tk 106.05.

In the last one year, from December 2014 to November 2015, average inflation clocked at 6.2 percent, down from 7.1 percent during the previous year.

Forex reserve

The best performing indicator has been the foreign currency reserve. As of Tuesday (Dec 29), it stood at $27.4 billion, higher than at any other time in the history of Bangladesh.

The reserve was at a little over $22 billion on the same day in 2014.

Remittance

Remittance inflow registered a 7.6 growth in the last fiscal, but it has taken a hit this year.

In the five months from July to November, expatriates sent $6.17 billion, down by 0.68 percent from the inflow in the same period last year.

Exports and Imports

In the 2014-15 fiscal, Bangladesh’s exports stood at $31.2 billion, up by 3.35 percent from the previous fiscal’s figures.

Between the ongoing fiscal’s July and November, Bangladesh earned $12.88 billion from exports, up by 6.71 percent over the same period in the 2014-15 fiscal.

Import cost has come down, thanks to the slump in global oil prices.

In the 2014-15 fiscal, cost of imports grew by 11.26 percent and in the five months of this fiscal (Jul-Nov) it was down by 2.3 percent.

LC (letter of credit) openings for oil imports have drastically come down in the current fiscal.

In 2014-15, LC openings were down by 20 percent. In the five months of the ongoing fiscal, the decline has been a staggering 50 percent.

The low cost of import has caused Bangladesh a huge surplus in its balance of payments (BOP).

In the four months of the 2015-16 fiscal it was at $936 million while during the same period of the previous fiscal it was at $135 million.

Revenue

The revenue collection target in the budget for 2015-16 has been fixed at Tk 1,763 billion.

Until November this year, revenue collection registered a 24 percent growth while in the 2014-15 fiscal it grew by 13.16 percent.

কৃষি ঋণ কমেছে: বাড়ানোর তাগাদা গভর্নরের

Agriculture

The one sector that has been experiencing consistent growth in the last few years is agriculture, facilitating a firm base for the economy.

According to the UN’s Food and Agriculture Organisation (FAO), Bangladesh tops the list of countries experiencing growth in fruit farming.

It is now the seventh largest producer of mangoes and eighth in terms of guavas.

Bangladesh has started export mangoes to Walmart with the FAO’s cooperation.

Bangladesh is among four countries poised to do better in fish farming in 2022.

According to the international research body World Fish, Hilsha productions in all of the eleven countries have decreased, except for Bangladesh.

The International Rice Research Institute (IRRI) has announced a new variety of rice, resistant to almost any adverse situation.

In 2015, the Bangladesh Rice Research Institute announced a Zinc enriched rice variety BRRI-72.

In an attempt to discourage imports of rice, the government imposed a 20 percent tariff twice in 2015.

The government, however, faced flak over the wheat it imported from Brazil this year.