Slower global growth may strain Bangladesh exports

The latest cut in global economic growth by the International Monetary Fund might put downside risks on Bangladesh’s export and inflow of foreign direct investment, analysts say.

The IMF yesterday revised down its economic growth outlook by 0.2 percentage point to 3.4% for both 2016 and 3.6% in 2017, as it cited slower growth in emerging markets, especially in China, falling commodity prices, and rising interest rates in the U.S. as potential risks to global growth.

World Bank lead economist Zahid Hussain said downgrade in global economic growth means it might bring some strain on Bangladesh’s export and capital inflow. He said the country’s substantial export earnings come from the Europe where demand might weaken as per the IMF’s latest growth outlook.

The Europe accounted for more than 50% of the country’s total export of more than $31bn, according to the latest data of the Export Promotion Bureau.

“The government’s 7% fiscal economic growth target is planned mainly depending on exports,” said Hussain. However, he said, the positive side of the slashing global economic growth is that interest rates might not rise, resulting in lower cost of funds.

However, Centre for Policy Dialogue executive director Mustafizur Rahman said the world economy is on recovery path from the recession, which is a positive sign for the Bangladesh economy.

“Look at the export growth trend. In December last, export saw 12.7% growth and overall 7.3% growth in first half of this fiscal. So far, it looks good,” he said.

For falling global oil prices, it was expected that investment would increase from oil-imported countries, but to no avail, he said. They seemed cautious as their savings caused by the lower oil prices are not translated into investment, he added.

Source: Dhaka Tribune


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