Staff Reporter :
In the absence of price stabilization measures, the country’s inflation rate has pushed the food prices by the end of the current fiscal year to stand at 9.4 per cent, reveals a study report.
According to researchers of Unnayan Onneshan (UO), such increase in price in the commodity market coupled with reduced production of food grains, decline in real wage, and lack of employment opportunities are likely to adversely affect people’s standard of living in the country.
Besides, comparative statistics suggest that food inflation became 6.95, 7.32 and 7.87 per cent in July, August and September of 2017 respectively compared to 4.35, 4.30 and 5.10 per cent in the fiscal year 2016. The survey report in its monthly publication of the ‘Bangladesh Economic Update’ October 2017′ also predicted that the declining growth in Gross Domestic Product (GDP) will persist if the indicators of external sector continue assuming current trends although the overall balance demonstrates surplus.
“It is threatening overall food security in the country,” said Chairperson of Unnayan Onneshan Rashed Al Mahmud.
“Recent rise in import, particularly import of consumer goods, vis-à-vis export earnings to be spell trouble for low income people whose standard of living deteriorates amid frequent price hikes in the commodity market,” he pointed out.
Rashed Al Mahmud added, “Floods as well as diseases broke out after deluge have resulted in less food grain production this year. Besides, low government buffer stock and inadequate tariff management also pushed the food items prices up in the country.”
Referring to the monumental increase in Letter of Credits (LCs) for the consumer goods like rice, and consequential price hike in recent time, the UO report reveals that during the period of July-August, 2017, fresh opening, settlement and outstanding of LCs increased by 74.27 per cent, 77.14 per cent and 41.32 per cent respectively compared to the corresponding period of the previous year.
Declining industrial term loan will decrease the investment demand-induced import of capital machinery and industrial raw goods, which may further aggravate the current declining growth in the manufacturing sector.
With increasing export concentration of readymade garments (RMG), growth in total export earnings exhibit a significant decline by 8.67 per cent in September 2017 compared to August 2017. Total export stood at $2.03 billion in the month of September, which is lower than the first two months of the current fiscal year, the report further revealed.
In view of the target of export earnings of $2.78 billion for September 2017, the actual earnings fell short by 26.72 per cent, signalling the continuation of failure in mobilizing revenue at the end of the fiscal year. In addition, non-diversification of export markets and lack of export competitive products may pose serious challenge to the performance of external sector, cautions the survey report.
Referring to declining rate of growth in inflows of wage earners remittance, the report shows that the inflow of remittance stood at $ 853.73 million in September 2017, declined by 39.82 per cent against August 2017 and 19.20 per cent against September 2016.
On yearly basis, the inflow of remittance also declined by 14.48 per cent and stood at $12769 million in FY 2016-17 compared to the previous fiscal year. In addition, declining inflow of remittance is likely to exert adverse impact on rural economy since consumption and expenditure of people’s living in rural areas are largely contingent upon remittance sent by their household members living abroad.
The report reveals that the decreasing rate of remittance and manpower exports are slowing the economy by reducing employment opportunities and output levels in the country. The report of UO suggested that in order to address the current structural bottlenecks that impede developments in the external sector of economy, a thorough re-examination of the current trade and industrial policies is pressing.
Adoption of a new policy regime aiming at expansion of productive capacities of the country that enhances utilization of productive resources through enhanced entrepreneurial capabilities and increased production linkages may be fruitful in achieving developments in this sector, thereby fostering growth of the economy.
Urging for the expansion of country’s productive capacities that enhance utilization of available resources through efficient entrepreneurial capabilities and increased production linkages, the UO recommends adoption of measures to stabilize price in the short run and strategies to foster employment-augmenting growth in the medium run.
In the absence of price stabilization measures, the country’s inflation rate has pushed the food prices by the end of the current fiscal year to stand at 9.4 per cent, reveals a study report.
According to researchers of Unnayan Onneshan (UO), such increase in price in the commodity market coupled with reduced production of food grains, decline in real wage, and lack of employment opportunities are likely to adversely affect people’s standard of living in the country.
Besides, comparative statistics suggest that food inflation became 6.95, 7.32 and 7.87 per cent in July, August and September of 2017 respectively compared to 4.35, 4.30 and 5.10 per cent in the fiscal year 2016. The survey report in its monthly publication of the ‘Bangladesh Economic Update’ October 2017′ also predicted that the declining growth in Gross Domestic Product (GDP) will persist if the indicators of external sector continue assuming current trends although the overall balance demonstrates surplus.
“It is threatening overall food security in the country,” said Chairperson of Unnayan Onneshan Rashed Al Mahmud.
“Recent rise in import, particularly import of consumer goods, vis-à-vis export earnings to be spell trouble for low income people whose standard of living deteriorates amid frequent price hikes in the commodity market,” he pointed out.
Rashed Al Mahmud added, “Floods as well as diseases broke out after deluge have resulted in less food grain production this year. Besides, low government buffer stock and inadequate tariff management also pushed the food items prices up in the country.”
Referring to the monumental increase in Letter of Credits (LCs) for the consumer goods like rice, and consequential price hike in recent time, the UO report reveals that during the period of July-August, 2017, fresh opening, settlement and outstanding of LCs increased by 74.27 per cent, 77.14 per cent and 41.32 per cent respectively compared to the corresponding period of the previous year.
Declining industrial term loan will decrease the investment demand-induced import of capital machinery and industrial raw goods, which may further aggravate the current declining growth in the manufacturing sector.
With increasing export concentration of readymade garments (RMG), growth in total export earnings exhibit a significant decline by 8.67 per cent in September 2017 compared to August 2017. Total export stood at $2.03 billion in the month of September, which is lower than the first two months of the current fiscal year, the report further revealed.
In view of the target of export earnings of $2.78 billion for September 2017, the actual earnings fell short by 26.72 per cent, signalling the continuation of failure in mobilizing revenue at the end of the fiscal year. In addition, non-diversification of export markets and lack of export competitive products may pose serious challenge to the performance of external sector, cautions the survey report.
Referring to declining rate of growth in inflows of wage earners remittance, the report shows that the inflow of remittance stood at $ 853.73 million in September 2017, declined by 39.82 per cent against August 2017 and 19.20 per cent against September 2016.
On yearly basis, the inflow of remittance also declined by 14.48 per cent and stood at $12769 million in FY 2016-17 compared to the previous fiscal year. In addition, declining inflow of remittance is likely to exert adverse impact on rural economy since consumption and expenditure of people’s living in rural areas are largely contingent upon remittance sent by their household members living abroad.
The report reveals that the decreasing rate of remittance and manpower exports are slowing the economy by reducing employment opportunities and output levels in the country. The report of UO suggested that in order to address the current structural bottlenecks that impede developments in the external sector of economy, a thorough re-examination of the current trade and industrial policies is pressing.
Adoption of a new policy regime aiming at expansion of productive capacities of the country that enhances utilization of productive resources through enhanced entrepreneurial capabilities and increased production linkages may be fruitful in achieving developments in this sector, thereby fostering growth of the economy.
Urging for the expansion of country’s productive capacities that enhance utilization of available resources through efficient entrepreneurial capabilities and increased production linkages, the UO recommends adoption of measures to stabilize price in the short run and strategies to foster employment-augmenting growth in the medium run.
