Staff Reporter :
Inflation largely caused by the ongoing Russia-Ukraine war is a big challenge in the coming months, according to an economic review report.
For the stabilization of the macroeconomic situation, the country needs cautionary measures in spending foreign currencies in view of higher import trend and the cascading Russia-Ukraine war fallout, it said.
The necessity of carefulness is needed in opening letters of credit (LC) to avoid unnecessary imports to save foreign currency reserves as one of the potential thrift measures, said the Metropolitan Chamber of Commerce and Industry (MCCI) in its economic review of third quarter (January-March) of the current fiscal year.
It said the general point to point inflation rate increased by 0.05 per cent to 6.22 per cent in March 2022 from 6.17 per cent in
the immediate past month (February 2022) due to an upward trend of food prices.
Soaring costs of essential food items like rice, edible oils, vegetables and others fired up the overall inflation. The inflation rate was lower at 5.47 per cent in March 2021.
On the other hand, non-food price inflation decreased by 0.06 per cent to 6.04 per cent in March 2022 from 6.10 per cent in the previous month. Year-on-year, non-food price inflation was also lower at 5.39 per cent in March 2021.
The rates of general, food and non-food point-to-point inflation in rural area in March 2022 were higher than the rates of urban area, the report said.
The private think-tank also said skillful management of high subsidies on electricity, gas and fertilizer prices is necessary, otherwise spending as subsidy will shoot up significantly. Some of the economic indicators appear to be less promising than projected earlier, despite the economy is rebounding, it said.
The rate of inflation has increased in the quarter under review and the fiscal framework continues to be weak in view of poor achievements, more specifically, both in terms of revenue mobilization and public expenditure, the report said. Unemployment situation and low investment remain as challenges, it added.
The MCCI said that the country’s economy is now rebounding from the Covid-19 pandemic shocks and before the onset of the pandemic the economy was growing rapidly (7.88 per cent in FY19).
During the third quarter, the major macroeconomic indicators are in a satisfactory position as exports and imports are two important drivers of the economy and amid the COVID-19 pandemic, both the areas have done well, the report added.
Robust export earnings have facilitated economic recovery in the recent time and the export-oriented garment, leather and domestic market-oriented steel, food-processing and transport sectors are running in full scale.
The inward remittances also increased, which has multiplier effects on other economic sectors. Foreign currency reserve is in a satisfactory position and the exchange rate has long been remained stable.
