Economic gloom, political risk may lead to a rocky 2023. Bangladesh is still bullish

Concerns over the Russia-Ukraine war, persistent inflation and the looming election hang heavy in the air as Bangladesh heads into the new year along with the rest of the world

Whether the year is new or old, it is all the same for Momin Miah, a day labourer. All his thinking is centred on one thing: “Some days I don’t get work and have to sleep on an empty stomach. For the dawn of a new year, I want work so I can eat my fill.”

Though Momin’s musings are not of global significance, his concerns get to the heart of the anxiety currently affecting the political and economic situations of Bangladesh and the rest of the world.

Numerous questions present themselves – will Bangladesh’s political situation be stable in 2023? Will the Russia-Ukraine war end? Will the world economy recover? Will inflation fall to a tolerable level? Will the coronavirus finally recede for good?

The number of COVID-19 cases in Bangladesh has decreased significantly in recent weeks, but there are concerns that wider outbreaks in China and other countries could lead to a resurgence of the pandemic.

Meanwhile, the war in Europe cast a shadow on the Bangladesh economy.

The opening of the Padma Bridge and Dhaka Metro Rail, which were to cap the last decade of development work and open new doors, have not been able to overcome the barriers of uncertainty brought on by the war.

No one can say for certain when the economy will stabilise unless the war ends, says Ahsan H Mansur, executive director of the Policy Research Institute, a think-tank.

There are also worries about unrest in the political arena that stems from the general election in 2023, the heat from which has been felt nationwide in recent weeks. Dr Sabbir Ahmed, a professor of political science at Dhaka University, believes political instability could harm Bangladesh’s reputation on the world stage.

As Bangladeshis enter 2023, these issues will be weighing on their minds.

THE END OF THE PANDEMIC?

Three years ago, the coronavirus pandemic threw the modern world into an unprecedented crisis. Bangladesh was not spared, and tallies of cases and deaths continued to rise as the gloom of mourning settled on the country.

In 2022, there has been a significant improvement on the COVID front. Bangladesh feels as if it is finally emerging from the pandemic. However, spikes in cases have been recorded in China, the US and Europe at the tail-end of the year.

The broad vaccination of the Bangladeshi populace is likely to prevent any quick deterioration.

“We’ve been able to properly manage the COVID situation,” said Dr Mushtuq Husain, former chief scientific officer at the government's disease research institute. “Given our resources and manpower, it was well handled.”

Since the start of the pandemic, more than two million people in Bangladesh have tested positive for the coronavirus. The death toll is approaching 30,000.

At the height of the pandemic in Bangladesh, the daily positivity rates for tests crossed 30 percent. Over 16,000 new coronavirus patients were identified in a day, and the daily death toll climbed above 250.

But now the positivity rate is hovering around 1 percent. Deaths from the disease are at zero or in the low single digits.

Health Minister Zahid Maleque cited an international survey and said that Bangladesh had been identified as a ‘role model’ for the way it had handled the pandemic. So far, vaccines worth Tk 400 billion have been distributed in the country for free, which not many others could boast of, he said.

Dr Mushtuq, however, still urges caution.

“If COVID starts to spread in the future, it could take on a terrible form. We must take preparations with that in mind.”

The rising cost of living has affected the public significantly and people from middle-income groups were also seen queuing for goods at subsidised prices for the poor.

ECONOMIC UNCERTAINTY

The pall the pandemic cast over the economy darkened as Russia invaded Ukraine at the start of the year. The war caused havoc on world markets as prices skyrocketed. Bangladesh felt the pressure too.

As the price of fuel oil rose sharply, Bangladesh moved away from its promise of 100 percent electricity coverage across the country, cutting back on power production. The government had to tighten its belt amid a dollar shortage and employ austerity. Runaway inflation has led to public outrage. There have been dire warnings about food shortages.

This situation will not change overnight, said Mansur, also a former economist at the International Monetary Fund.

“Until the trade deficit hits an acceptable level, the economy will continue to be under pressure,” he said. “Until foreign exchange reserves increase, the government will have to continue curbing imports and reducing spending.”

These macroeconomic pressures have trickled down to regular life. The rising cost of living has affected the public significantly and people from middle-income groups were also seen queuing for goods at subsidised prices for the poor.

Inflation had been on the upswing at the end of February. After crossing 7 percent at the end of March, it jumped to 9.52 percent in August, the highest level in the past 11 years. It has eased slightly afterwards, according to government data, although economists have been adamant that the government’s estimates of inflation are much lower than the actual rate. Prices of food and all products that depend on imports have increased. The hike in the price of paper has put an additional burden on the parents of schoolchildren.

“School admission fees rise each year,” says Abdul Karim, a Dhaka resident. “As the price of books and paper rises, they are bound to jump even more. I’m worried.”

As economic activity declines, those who work day to day to fill their stomachs are suffering too. It is sometimes hard to find any work at all, according to Momin, a labourer.

“I’m feeding five people,” he said. “If you don’t get work, you have to go hungry. If you get work, it doesn’t pay more than Tk 500. That’s how we’re spending our days.”

“What’s there to say? I don’t get any work. My one hope is that the new year will bring new jobs,” said Surat Ali, a rickshaw-van driver.

POLITICS HEATING UP

The political arena remained largely calm throughout the pandemic, but a year out from the general election, it seems to be heating up.

The clashes in the lead-up to the BNP’s Dec 10 rally in Dhaka suggest that the heat is not likely to die down in 2023.

During the 14 consecutive years, the Awami League has been in power, their political opposition has not been able to mount a significant challenge. Since 2014, there has been relatively little political violence.

But there are signs that things are changing. The BNP is firmly pushing for its regular demand for a caretaker government. They have already launched programmes nationwide as part of an anti-government movement.

“I believe the new year will be the year of a movement to restore democracy,” said Khandaker Mosharraf Hossain, a senior BNP leader. “If the government doesn’t accede to our demand, the judgement of this movement will be delivered on the streets.”

The government, struggling with a fragile economy, is nonetheless gearing up to tackle the political challenge head-on. The ruling party has recently held its national council to lay out plans to tackle the BNP’s movement.

“There are many challenges ahead of us -- militancy, sectarianism, the BNP’s movement to overthrow the government,” said Awami League General Secretary Obaidul Quader. “We hope the coming year will go as well as our previous days have. We’re preparing for the election.”

The Election Commission’s roadmap puts the 12th parliamentary elections in late 2023 or early 2024. Before then, Chief Election Commissioner Kazi Habibul Awal is seeking to establish a common ground between the two major political parties.

“Political compromise and consensus are very necessary,” he said. “We’re distressed when the parties are so polarised. We want their positions to be mutually accommodating so that we can move towards reconciliation and hold peaceful elections.”

WHERE IS THE HOPE?

Despite these signs of unrest in politics and the economy, people still want to be optimistic about the new year. Dhaka University student Rebecca Sultana felt upbeat about what the new metro rail would offer.

Bangladesh entered the era of electric trains with the launch of the country’s first metropolitan rail service in Dhaka in the last month of the year. The 6-km-long bridge over the Padma River was opened to road traffic midway through the year as well. The construction of its railway bridge is also proceeding.

The tunnel under the Karnaphuli River, which could transform the connectivity infrastructure of the area, is also nearing completion. Construction work on the Rooppur Nuclear Power Plant, the addition of which to the national power grid would put Bangladesh in an ‘elite club’, is also advancing.

In the last decade, Bangladesh has taken one step after another on the road to economic progress, making the transition from a least-developed country to a developing nation.

Though the war in Ukraine has interrupted this progress, José Viñals, group chairman of Standard Chartered, is not overly concerned.

“Bangladesh, fortunately, is in a different situation. You don't have high external debt. With the level of coverage of foreign reserves, even if it has declined, you still have several months there,” Viñals said in a recent interview with bdnews24.com.

“Then I see a private sector, despite these recent turbulences, that is very determined to succeed and has a lot of vitality. Frankly speaking, I think that Bangladesh has the potential over the medium term to become one of the stars in Asia.”

The US-China trade war was among the issues he highlighted during the interview. Viñals believes Bangladesh has an excellent opportunity to benefit from the changes that are coming to the global supply chain.

The question is: can Bangladesh play its cards wisely to take advantage of the opportunity?

Professor Sabbir Ahmed believes 2023 will be the most important year for political coexistence and consensus amid the looming fear of violence around the polls.

“There needs to be proper preparation for a fair election with the involvement of all parties,” he said. “The Election Commission cannot hold a fair election on its own. There must be a similar commitment from the ruling party, and the security forces and law enforcement must be kept neutral.”

Diplomatic circles are concerned about the political instability in Bangladesh, but this will not have a major impact on the coming national elections, according to Imtiaz Ahmed, a professor of international relations at Dhaka University.

“The main focus of the politics of Bangladesh should always be the people of Bangladesh,” he said. “Change can only happen if the people of Bangladesh en masse and in the millions take to the streets. The speeches of diplomats from abroad and other such things have never had a significant impact, nor will it this time.”

These diplomats are also looking to safeguard their own interests, he said.

“They will see whether they can get any benefit from divisive politics. They will try to do so this time as long as the politics of division are in our midst. They will try to leverage that gap to get new advantages. How far they get remains to be seen.”

No foreign power can truly interfere with the internal politics of Bangladesh as there is no superpower on the world stage, Prof Ahmed said.

“There may be some talk, but the main stakeholders are in Bangladesh. Not only the politicians but also the business community, the student community, and the security forces. These stakeholders will decide the nature of democracy and the character of politics in Bangladesh. The stakeholders will change their thinking when people take to the streets. Until then, we don’t see big changes.”

[Writing in English by Shoumik Hassin]