Dhaka: As the election time approaches, the familiar picture of conflict-violence-sabotage seems to have returned in the field of politics. In particular, the strike on October 29 and the blockade that followed a day later saw arson and vandalism of vehicles.
Innocent people are losing their lives due to these violent political activities. The wealth of the country is being wasted. Import and export are affected. Due to disruption in supply, prices of goods are increasing. In such a situation, the economy, which is already in crisis, is getting more crisis.
The economic downturn has had a negative impact on investment, banking, insurance and capital markets. At the same time, beyond the financial sectors including trade and commerce, the life of common people including education is facing various damages.
Meanwhile, ahead of the 12th national election, economists fear that the country’s industrial production and trade will be disrupted due to political unrest. According to them, the economy is also burning with people in the fire of politics. Due to blockades and strikes, the damage to other sectors including transport, agriculture, clothing and manufacturing industries is increasing day by day. The overall economy of the country including industrial production is being severely disrupted. At the same time, the export of ready-made garments is hampered due to the collapse of the transport system. Small and medium enterprises are losing capital. If this political instability increases or prolongs, the crisis in the country’s business and commerce as well as the overall economy will deepen. As a result, if such economic destructive activities are not stopped in the name of hartal-blockade, they think that this recession will increase further and it will be difficult to compensate the loss of the overall economy.
Businessmen claim that the 5-day blockade called by BNP till November 8 has caused a loss of at least 32 thousand crore rupees. Apart from this, at least 25 crores worth of damage has been caused due to fire and vandalism of vehicles. They said that the damage is high due to the increased cost of transportation of goods and disruption of production in factories. And the fear of FBCCI, the top organization of traders, if this situation continues, inflation will increase due to increase in commodity prices. Besides, if such a situation continues, such anarchy may take a more dire form. This may have a negative impact on the import-export sector. Besides, the normal chain of supply of goods across the country may collapse. And in this, the price of consumer goods in the new market increases one more step. And it will be difficult to maintain the normal production of the factories as they cannot keep the raw material supply schedule.
It is known that the Ukraine-Russia war started when Bangladesh was trying to boost the economy after the outbreak of the global epidemic corona, which had a severe impact on the world economy. In the meantime, the Palestinian-Israeli war has become a ‘wound on the wall’. This has resulted in a complicated situation in the Middle East. This war also has a negative impact on the economy of Bangladesh. In such a situation, the foreign exchange reserves have been put under extra pressure to pay the import price. Reserves fell from $40 billion to $19 billion. Although the government has taken various initiatives to deal with the shortage of foreign exchange, none of them have been very fruitful. Due to import controls, there is a need to speed up the supply of fuel and daily commodities.
In addition, foreign transactions including the import of industrial raw materials and energy have come to a standstill due to the dollar crisis. Due to shortage of LNG and gas, domestic industrial production continues to decline. Food inflation has reached the highest level in an era. In this desperate situation, blockade-strike, vandalism-fire as a political program across the country is ominous for the economy.
In this situation, the main task to keep the country’s economy running is to control high inflation, increase the supply of dollars and prevent the decline of reserves. But export earnings, emigration earnings, foreign investment, loans and grants are declining. Again due to increase in prices in the international market and increase in currency exchange rate, import expenses, debt repayment and outgoing remittances are struggling to be paid.
During the corona epidemic, the government was able to overcome the crisis and restore the momentum of the economy by taking various measures including incentives to deal with the situation. But now the political turmoil threatens to disrupt trade and investment again. Now if the economy gets a big hit, it may be difficult to recover from it, the concerned people think.
Prominent economist and former financial advisor of the caretaker government. AB Mirza Azizul Islam told Banglanews that the strike or blockade is bound to affect the economy. This is because political violence or unrest disrupts the import and export of goods. Product transportation, production is disrupted. As a result, employment generation is reduced. This reduces the standard of living of low income people.
He said that inflation increases in such situations. Because the blockade breaks down the supply system. Apart from this, defaulted loans and liquidity crisis in banks will further increase in the country. Besides, remittance and export earnings will decrease at an alarming rate. The dollar crisis will reach a more dire level. The decline in reserves will gain new momentum, which will become difficult to manage.
This former financial adviser said that now to get out of this situation, we have to negotiate with different political parties and make an agreement. Otherwise, this conflicting politics will throw the economy into great uncertainty.
Eminent economist and executive director of private research organization Policy Research Institute (PRI) Ahsan H. Mansoor said that when elections come, a kind of instability is created, which the whole country has to pay for. This time too there was a conflict. Now the question is – where will this conflict end? If the conflict escalates, its economic impact will be massive. Because this time the economic situation is quite weak compared to other times, the global situation is also not favorable.
He said, the way the production activities are being disrupted for the last few days, it may be long-term. This will lead to inflationary pressures, dollar crisis and employment opportunities. An adverse situation will be created in all sectors of the economy. Exports decreased last month, will decrease further in the coming months. As a result, this situation may continue until there is a peaceful solution to the election, which will have dire economic and social consequences. But so far there is no sign of flexibility in the attitude of politicians. In any way, the situation should be improved, it should be through the political parties.
Industrial entrepreneurs said that the trend of decreasing import of capital used in production is very worrying. A decrease in capital imports means that production will decrease. This will further reduce exports. Absence of the amount of dollars that now comes in through exports means further strain on reserves. The main source of foreign exchange is the export sector. An average of 5 billion dollars a month comes from the export of goods. Exports of goods fell by 14 percent in October compared to the same month of the previous fiscal. Garment exports fell by 13 percent in October compared to September. Exports worth 376 million dollars in the month. That is $600 million less than the same month last year. An average of 5 billion dollars worth of goods are exported every month. According to this, in October, 124 million dollars were exported less. Industry entrepreneurs are blaming the political programs of the last few days as the reason for this is the fear of election-centered conflict.
Meanwhile, in the first three months of the fiscal year, the import of capital equipment is decreasing by almost 20 percent. The import of raw materials of various types of ready-made garments has decreased by about 26 percent compared to the same period of the last financial year. Imports of cotton, the main raw material for apparel production, have declined the most, by about 39 percent. Yarn, cloth and other raw materials also decreased at almost the same rate. Imports of other raw materials other than apparel fell by more than 36 percent. A decrease in the import of raw materials means a decrease in production. A decrease in production means a decrease in exports. The investment situation in the country is understood in the capital equipment import figure.
Besides, at the end of September of the current financial year, the amount of trade deficit is 118 million 80 million dollars. And as of September, the amount of financial deficit is 392 billion 90 million dollars. The surplus was 83.9 million dollars during the same period of the last financial year. Exports fell by around 14 percent in the latest October. Expatriate income rose in October but fell in the previous three months. Imports of industrial raw materials and capital equipment fell, indicating a slowdown in investment. According to the latest labor survey, employment has also declined.
Bangladesh Time: 0802 hours, November 12, 2023