Kazi Zahidul Hasan :
The current fall in remittance as a result of troubles in Middle East countries could hit the economy badly, say economists.
They said, remittances have direct effects on aggregate demand, personal consumption, money supply and exchange rates. So, a fall in remittance is likely to dampen the GDP growth.
Bangladesh, the eighth biggest remittance recipient country in the world, relies on such inflows to drive consumer spending, which accounts for nearly 80 per cent of domestic GDP.
“Remittances send home by Bangladeshi workers abroad is seen a falling trend in the recent months creating an uncertainty over economic growth,” Dr Ahsan Monsoor, a leading economist of the country, told The New Nation on Thursday.
He said, an overall drop in remittances is likely to worsen standards of living in remittance-receiving families staying in rural Bangladesh”.
Dr Ahsan Monsoor further said the rural economy is largely driven by expatriates’ remittance as it helps prop up consumers demand. A falling remittance will badly affect consumption of rural consumers, leaving a negative impact on GDP growth. When asked, he said, the primary cause of falling remittance to be spared from oil price drop. The plunging oil prices take a hit on the development spending of Middle East countries leading to fall in income of the migrant workers there. Middle East countries are prime destinations for Bangladeshi migrant workers.
The country’s remittance inflow witnessed a sharp fall in the first month of current year compared to the previous month amid falling oil price in the international market.
Inward remittance flow dropped by 12.23 per cent to $1.15 billion in January from $1.31 billion in December last year, according to the Bangladesh Bank (BB) data released on Wednesday.
Earlier in October last year, remittance experienced a 19.42 per cent drop. “The economy of Middle-East countries is badly affected by falling oil price which accounted for slower remittance growth,” Dr Salehuddin Ahmed, former BB Governor told The New Nation on Thursday.
He said, migrant remittances are contributing to increase the national income and consumption to millions of families in rural areas. It also an important factor in declining poverty rates in recent years.
“Remittance lifts millions of people out of poverty, and a large and prolonged decline in remittance inflows may create an uncertainty over the further poverty reduction,” added Dr Salehuddin Ahmed.
The remittance inflow in Bangladesh experienced a slight growth by 2.47 per cent to $15.31 billion in the just-concluded fiscal year 2015 compared to $14.94 billion in 2013-14.
The country witnessed 2.47 per cent remittance growth last year compared to 8 per cent in the previous year.
Bangladesh received $8.64 billion during the July-January period of the ongoing fiscal year (2015-16), recording a negative growth of 1.04 per cent over the same period of the previous fiscal, the BB data showed.
