Resolving impasse key to halt collapse: economists
The country’s economy in the New Year of 2014 that begins today will depend on amicable settlement of the political impasse between the government and the opposition to restore stability as soon as possible, economists on Tuesday said. Otherwise, the economic situation that has already reached on the verge of collapse in last few months may be the worst one in the year 2014, they apprehended.
As long as political instability prolongs, economic uncertainty will be the most certain prediction for the next year, they said.
They also see no hopes in facing the challenges carried on from the previous year in the economy until the end of the ongoing unrest centering the handover of power through national elections with participation of all major political parties.
Achieving the targets of the gross domestic product growth, revenue collection, export earnings, annual development programme implementation, public and private sector investment and reining the increasing inflation would be impossible over the next year, leaving a negative impact on the economy in short and medium terms, they observed.
‘The economy is entering the new year in a situation where most of the macro-economic indicators are under huge pressure because of the ongoing political turbulence in the country,’ Mustafizur Rahman, executive director of the Centre for Policy Dialogue, told New Age on Tuesday.
Political unrest caused disruption in supply chain, increased cost of doing business and reduced competitiveness in trade in last few months. So, if confrontational politics continues, it will keep multilayer negative impact on the economy, particularly on achieving GDP growth, investment, revenue collection and ADP implementation targets, he said.
Only ensuring continuity of democratic process through mutually agreed political consensus, apart from addressing all-time setback in the country’s economy including lack of infrastructure and crisis in gas and electricity supply, can bring hope for the people, he explained.
The government has set a target of attaining GDP growth at 7.2 per cent while International Monetary Fund, World Bank, Asian Development Bank and all other national and international development partners predicted that the GDP growth would be at the range from 5.5 per cent to 5.8 per cent.
Mustafiz said that transforming the country into a middle income one by 2021 would be uncertain if targeted GDP growth remained unachieved.
According to the statistics of different government bodies, private sector investment experienced a negative growth in last few months as term loan disbursement dipped by negative 8.9 per cent in the first quarter of the current fiscal year. ADP implementation rate also dropped to 20 per cent in July-November.
Shortfall in revenue collection by the National Board of Revenue has reached to a new height of Tk 5,331 crore in the first five months of the current fiscal year due mainly to prolonged political unrest in the country.
Former adviser to the caretaker government Mirza Azizul Islam said that the outgoing year created some risks including negative growth in remittance inflow, uncertainty over export-growth, disruption in production and supply chain and transportation and slower growth in import and investment in the economy.
How far the government will be able to remove these risks will depend on ensuring political stability through amicable consensus among political parties, he said.
He predicted that GDP growth rate may fall below 5.5 per cent while inflation may increase due to push in prices of essential goods due to disruption in supply chain, if the situation prolongs.
Former Bangladesh Bank governor Salehuddin Ahmed said if the government was formed through one-sided elections, it would face severe obstruction in implementing its development decisions from the outset of the government that will lead the economy towards the worst situation.
Increased disparity in income, fall in employment generation and drops of standards of livelihoods of poor people would further deepen in the coming months, if political parties, particularly the ruling party, fail to resolve the crisis.
Policy Research Institute executive director Ahsan H Mansur said that there was nothing to expect from the economy in the next year, if ongoing political crises were not resolved.
The excess burden such as scandal in banking sector, crisis in readymade garment sector and recession in businesses which are being carried over into the new year from the year 2013 would create additional pressure on the economy, he said.
-With New Age input
