2023 brings new challenges, opportunities for economy

As Bangladesh enters a new calendar year, the country faces a new challenge to maintain growth while overcoming global and internal macroeconomic challenges, economists said. 

Economists have expressed optimism about the economy based on a high food production rate, growth in exports and remittances, and stability of foreign exchange reserves.

Bangladesh's economy will continue to demonstrate its resilience in 2023 as well due to its inherent strengths, according to eminent economist Dr Atiur Rahman.

Despite global challenges, the government and all international financing and development agencies predict that the economy will grow by over six and a half percentage points. The growth outlook, however, may change based on the outcome of the Ukraine war, which has led to global supply chain disruptions and economic sanctions.

The economy of Bangladesh will certainly make a quantum jump if geopolitical tensions subside following the end of the war. This, of course, cannot be taken for granted,” Dr Atiur, former governor of Bangladesh Bank, said.

Dr Atiur suggested that the government should, therefore, continue to invest in the domestic economy to ensure food security from within rather than global sourcing to avoid import-induced inflation. Global commodity prices are falling and this will have some positive effects on the prices of imported goods.

According to the noted economist, there is no alternative to improving the quality of governance and accountability in the financial sector to ensure macroeconomic stability.

“It is expected that government and regulators will simultaneously take a stronger stance to make stakeholders focus more on the quality of asset classes with well-monitored end uses of the same for overcoming the existing inconsistencies and incongruence in the sector. It is reasonable to expect that government will improve its drive for higher mobilization of domestic revenues by expanding the use of digital technology if we really want to release some pressure on public borrowing from the banking sector, he said.

The economist suggested the government sell more securities and Treasury bonds directly to the people by making the transactions digital and user-friendly.

Referring to compliance with Basel-3 requirements, Dr Atiur mentioned that banks will be well advised to strengthen their capital base by ensuring better risk management and continue to focus on the quality of assets more carefully.

“By focusing more on inclusive finance to invest in the real economy including agriculture, SMEs and domestic manufacturing units we can make our economy more sustainable defying the global economic challenges,” he said.

Dr Atiur further advised that the economy should continue to remain focused on this long-term sustainable development goal instead of just making short-term patches for survival.

Bangladesh's economy is expected to grow further in 2023 due to an increasing trend in export earnings and remittances, according to economist Dr Zaid Bakht.

"We have shown resilience in the face of the Coronavirus pandemic. The world was shaken by the Russian evasion of Ukraine. Bangladesh has kept the economy stable through tightening policy measures amid global supply chain disruption. The dollar price is stable now. Remittance inflows will continue to increase in 2023. Import demand declines. The economy will be in a good position by first quarter of the year,” Dr Zaid Bakht, also chairman of Agrani Bank, said.

Ahsan H Mansur, executive director of the Policy Research Institute, expressed optimism about the revival of economic growth in 2023.

In recent months, remittance inflows have been increasing. For our foreign exchange reserves to remain stable, remittances must be channelled through banking channels, whether money exchange or mobile banking. In the international market, commodity prices have declined, which is a positive sign for the new year. However, Bangladesh needs to keep policy measures in place to strengthen its currency to take advantage of the situation,” Dr Mansur said.

According to the former IMF official, readymade garments may drive export earnings to grow by 10-12 percent in 2023 as foreign buyers shift their purchases from China to Bangladesh.

In the year of the national elections, Dr Mansur advised the financial regulator to focus on several issues, including paying import dues and controlling capital flight.

Bangladesh posted export earnings of $5.09 billion, the highest-ever single-month amount, in November despite global economic turmoil and high inflation, Export Promotion Bureau (EPB) data shows.

Bangladesh's per capita income rose to $2,824 in the fiscal year 2021-2022.