Lowest remittance in six years is a big threat to growth

THE inflow of remittance in fiscal 2016-17 has been the lowest in six years to show a dark cloud slowly gathering on the country’s economy. Bangladesh Bank data show that migrant workers sent home $12.77 billion during last fiscal year; which is down by 14.47 percent year-on-year. Remittance is a major source of foreign currency for Bangladesh and the declining trend since fiscal 2015-16 has become a matter of big concern for the country as the import bill settlement is much more dependent on healthy remittance, in addition to running a healthy rural economy. Bangladesh economy is largely dependent on remittance and the slide is a real threat to economic growth.

What is noticeable is that our government is not helpful to our expatriate workers abroad where they face inhuman treatment and hostile working environment. But they still stay on to work and earn for their families and the country. But when economic recession and hostile political situation are hitting them hard in their host countries, they are left to suffer without help and care from the government.

The government seemed quite unwary to the coming danger at a time when the global economic situation is adversely impacting our migrant workers. Particularly the countries of the Middle East; which host most Bangladeshi workers are undergoing economic crisis and political turmoil. The war like Gulf crisis is feared to make the situation worse in labour market in those countries and it means more decline in remittance and its negative impact on the economy and business.

The economic growth is now on an average above 6.5 percent and any drive to achieve higher growth or even to maintain the present level would depend on whether the remittance situation will improve. The other question is how the government would face the situation if the slide continues.

The central bank said the remittance were lower every month since May last year. In June, the country received $1.21 billion; down 17 percent from a year earlier. Over the last 10 years, remittances accounted for 8.5 percent of the country’s gross domestic product on average, close to eight times the foreign direct investment. Experts said that the slum was due to persistent weaknesses in the Gulf economies and troubles in Malaysia, Britain, other European countries and the USA where our migrant workers are living under manifold duress and security concerns.

Many also fear that illegal syndicates running currency business through informal channel avoiding transactions through banks are also diverting remittance to major global business hubs. They are buying real estates and new business when the country is losing foreign currency systematically.

The biggest affect of the slow down of remittance is feared to be on rural economy as most middle income and poor families are dependent on remittance. Consequently demand for consumers’ goods in the economy may shrink to impact productivity. It will have chain effect on consumption, saving and investment.