Kazi Zahidul Hasan :
A sharp decline in inward remittance flow as a result of economic slowdown and falling of oil prices in the Gulf region could have a major impact on the domestic economy, economists warned on Wednesday.
They said, the fall despite a significant rise in the number of Bangladeshi workers abroad reflecting the decline in income and savings of Bangladeshi expatriates.
“Remittance inflow has been falling sharply over the months which might cause adverse impact on consumer spending finally passing through the country’s economy in the near future,” Dr AB Mirza Azizul Islam, a leading economist of the country, told The New Nation on Wednesday.
“An economic slowdown and falling oil prices in the Arabian Gulf region, the major source of Bangladesh’s remittances- are seen as major contributors to the drop in remittances,” he added.
Mirza Azizul Islam, a former finance adviser to the caretaker government, said, the decline in oil prices affected incomes in the Gulf Cooperation Council (GCC) economies forcing them to cut salary, bonus and overtime payment of migrant workers. “This has affected earnings of migrant Bangladeshis leading them to send home a smaller amount to their families causing drop in overall remittance flow,” he added.
He said if the ongoing bleak prosperity in the Middle East lingers, remittance flows to Bangladesh will further decline, affecting growth of the domestic economy.
Bangladesh witnessed a 22 per cent fall in remittance income in September this year compared with the corresponding month of previous year.
Migrant workers sent home $1.04 billion last month. The amount is 11.83 percent lower than August’s receipts of $1.18 billion, according to a provisional data of Bangladesh Bank (BB). Overall remittance income fell by 2.54 per cent to $14.93 billion in fiscal 2015-16 despite a significant rise in migrant outflow in the previous two fiscal years.
Bangladesh received $15.31 billion remittance in fiscal 2014-15, recording an increase by 7.70 per cent over the previous year’s receipts. “The sharp drop in remittance flow is worrying as migrant remittance is playing vital role in the country’s socio-economic development,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) governor told The New Nation yesterday. He said, remittance income has huge macro-economic impact on Bangladesh. It helps boosting consumer spending, improving living standards of migrant’s families, alleviating poverty, creating jobs for rural population and building up foreign reserve.
“So, the ongoing fall in inward remittances must leave an adverse impact on Bangladesh economy,” he added.
Over 10 million Bangladeshis work abroad in various jobs. The money they send home accounted for nearly 8.0 per cent of the country’s gross domestic product (GDP).
A total of 6.8 lakh Bangladeshis went abroad for jobs in fiscal 2015-16. Of them, about 71.3 per cent went to the Gulf countries. Among the Gulf States, Saudi Arabia has been the largest source of remittances, followed by UAE, Qatar, Oman, Bahrain, Kuwait, Libya and Iraq.
Countries like Singapore, Malaysia, the US and the UK are also significantly contributing to Bangladesh’s remittance income. “Bangladesh is witnessing a fall in remittance earnings in recent months as the real income of its migrants is waning in the GCC countries,” Dr Ahsan H Monsur, another leading economist of the country, told The New Nation yesterday.
The falling value of pound sterling as a result of Brexit also contributed to the drop in remittances.
“Remittance send by migrant workers pays a crucial role in boosting rural economy and helping reduce in overall incidence of rural poverty. So, a drop in remittance flow is going to hit the economy badly,” he added.
When asked, Dr Ahsan H Monsur, it would not harm the strengths of the country’s external sector when exports and FDI flow remained stable.
