Economist Intelligence Unit forecasts election win for Awami League

The Economist Intelligence Unit, or EIU, expects the ruling Awami League will return to power in the Dec 30 parliamentary election.

In the latest country briefing note, the EIU, the research and analysis division of the Economist Group, said the party has overseen solid economic growth and its reelection will be assisted by patronage at local level.

The political environment will be characterised by frequent bouts of social unrest during the 2019-23 forecast period, according to the report released this month.

Along with the immediate threat of terrorist attacks, opposition protests and public demonstrations will pose risks to political stability, it said.

According to the forecast by the London-based group, Bangladesh’s economic growth would remain robust and real GDP will grow by an average of 7.7 percent per year in 2018/19-2022/23, bolstered by strong increases in private consumption and gross fixed investment.

The report also specifically mentions the reputation of Prime Minister Sheikh Hasina as being the key factor in election. It states that Hasina remains the “most popular candidate”, according to numerous local opinion polls.

The country’s impressive record of economic growth and socio-economic development under the Awami League administration, coupled with a lack of an effective opposition election campaign, will be enough to fend off any challenge posed by the BNP or the Jatiya Oikya Front more broadly, the EIU said.

The report adds that a win for the Awami League will be important in sustaining foreign investment, and will also support the administration’s drive to expand and deepen private sector participation in the economy.

Following such a win, Bangladesh is expected to continue to exploit its strategically important location on the Bay of Bengal to extract concessions and economic assistance from India, China and Japan.

But Bangladesh’s relations with Myanmar will remain tense in the medium term owing to the Rohingya refugee crisis which will remain severe, at least in the early part of the forecast period.

ELECTION WATCH

Despite the BNP’s decision to participate, as part of a larger political alliance—the Jatiya Oikya Front—the EIU expects the AL to maintain its majority in parliament, partly owing to its well-entrenched system of patronage at local level and also because it has overseen a period of solid economic growth.

“However, the risks to our call of an AL victory have risen markedly,” said the EIU.

The Jatiya Oikya Front is led by Kamal Hossain, a veteran politician and key author of Bangladesh’s first constitution. He is seen as a secular icon, who will help soften the impact of the BNP’s nationalist reputation on the overall image of the alliance.

The government’s hardline response to recent student protests over road safety has reduced AL support among younger voters, according to the report.

In addition, recent arrests of opposition leaders may play on voter sympathy in favour of the BNP, it said.

However, the current prime minister, Sheikh Hasina, remains the most popular candidate, the EIU said citing numerous local opinion polls.

“We believe that the country’s impressive record of economic growth and socio-economic development under the AL administration, coupled with a lack of an effective opposition election campaign, will be enough to fend off any challenge posed by the BNP or the Jatiya Oikya Front more broadly.”

It is likely, however, that the BNP’s participation will reduce the AL’s margin of victory to some extent, the EIU said.

FOREIGN POLICY

Bangladesh’s foreign policy will continue to centre on its neighbours, with China and India vying for influence. Ties with India will continue to strengthen throughout the 2019-23 forecast period.

However, developments since July in India’s north-eastern Assam state, where the issue of illegal migration from Bangladesh has gained increasing political traction, pose a minor risk of straining bilateral relations.

“A dispute over the sharing of the Teesta River’s waters is likely to be put on hold until after India’s parliamentary elections next year, after which we expect Bangladesh and India to make renewed attempts to negotiate an agreement,” the EIU said.

“We also expect economic engagement with China to deepen in 2019-23, given the rising number of Chinese-backed infrastructure projects in Bangladesh.”

China is already Bangladesh’s largest source of imports and its main supplier of military equipment. “We expect Bangladesh to continue to exploit its strategically important location on the Bay of Bengal to extract concessions and economic assistance from India, China and Japan.”

The EIU said Bangladesh’s relations with Myanmar will remain tense in the medium term. “The Rohingya refugee crisis will remain severe, at least in the early part of our forecast period, and will persist at an elevated but more stable level thereafter.”

POLICY TRENDS

The policy agenda will focus on incentives to encourage investment and improve security during 2019-23. We expect the AL to win the December election, enabling a continuation of the status quo.

This will be important in sustaining foreign investment, and will also support the administration’s drive to expand and deepen private-sector participation in the economy.

The authorities will continue to accord a high priority to achieving the UN’s Sustainable Development Goals.  In addition, the government aims to transform Bangladesh into an uppermiddle-income economy by 2021.

However, incomes would have to rise almost threefold from their current level for Bangladesh to move into the next income bracket defined by the World Bank as gross national income per head of at least $3,896 for the 2018/19 fiscal year.

“We do not believe that this will be achieved according to the government’s timeline,” the EIU said.

As Bangladesh is set to graduate from “least developed country” status LDC, a UN classification based on economic and social development in 2024, it will steadily lose some forms of concessional aid, as well as the preferential market access that LDCs typically benefit from.

“We expect government policy in 2019-23 to be directed towards securing bilateral trade and financing agreements with major economic partners in order to minimise trade disruption and ensure a smooth transition to “developing country” status,” the EIU said.

“The more fundamental challenge for policymakers is to increase electricity supplies; for decades, demand has outstripped supply. To overcome this mismatch as quickly as possible, the government is turning to coal and liquefied natural gas.”