Media reports on Tuesday said that fallouts from the Russia-Ukraine war and global commodity-price spiral may shrink Bangladesh’s economic growth and also fuel inflation by this fiscal year end, the central bank forewarns. Following the war, there have been serious structural changes in the entire global scenario — in the political, social and economic arena. Within this situation, a country like Bangladesh, striving to move towards developing its economy from its LDC status, showed a skyrocketing commodity-price structure accompanied by fuel inflation.
Meanwhile, the Bangladesh Bank (BB) in its latest quarterly economic review report, released Monday, forecasts that the growth momentum is expected to be stronger in the rest of the current fiscal year 2021-22, hinging upon growth-supportive fiscal and monetary measures, growing external and internal demand, improving Covid-19 situation, and rising business confidence. The report believes that all these positive indications will be helpful to rehabilitate the rising business confidence undergoing in the country. Besides, it added, the sharpening of global energy and non-energy commodity-price spikes caused by the war may translate into domestic prices and create an unfavorable position in the balance of payments in the coming months.
In the context of the changing worldwide panorama, the financial experts, professional economists and well known peers, urged the government to take pivotal policy measures immediately to confront possible external pressures on the economy. Dr Mustafa K. Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), noted that the inflationary pressure on the economy had already increased following higher prices of commodities on the global market. “Uncertainty in the external economic outlook of Bangladesh is intensifying gradually because of the Russia-Ukraine war. He noted that inflationary pressure on the economy had already increased following higher prices of commodities on the global market. Another economist and professor at the Bangladesh Institute of Bank Management (BIBM) Shah Md. Ahsan Habib said Bangladesh may face higher inflationary pressure in the coming months mainly due to higher prices of commodities along with fuel oils on the global market.
The government has already projected GDP growth at 7.2 per cent for FY’22 while inflation was targeted at 5.30 per cent on an average 12-month basis. Since Bangladesh does have relatively smaller trade linkage with Russia and Ukraine, that is why the direct adverse impact of the war on Bangladesh is expected to be modest, according to the BB report.
