Bangladesh Bank (BB) is moving forward cautiously with optimism to reduce the stress on the economy, which was created by the US dollar crisis and higher inflation.
The central bank underscored such observations in a quarterly report on the economy. It said the economy remained under stress from external effects, including rising commodity prices and supply disruptions due to the ongoing Russia-Ukraine war, global economic slowdown, and volatility in the financial sector.
The issue is related to geopolitical conflicts and the situation would not be resolved overnight. So, banks and other financial institutes should be careful in future financial plans, as stated in the report.
The central bank publishes such reports every three months with updated data on the overall economy of the country.
According to the report, Bangladesh is under pressure of geopolitical conflict for the first time. Its negative impact has not yet hit the economy. But the economy is under pressure. In this case, steps should be taken with caution.
A large part of the economy is dependent on the United States, Canada, and the European Union. Most of the foreign investment in Bangladesh comes from these regions. About 82 percent of exports go to these countries.
On the other hand, 72 percent of imports are coming from India and China. Most of the remittances are now coming from America. There is a danger that Bangladesh`s export earnings and remittances will be damaged due to the geopolitical conflict that has arisen at present.
Geopolitically, China`s disagreement with the United States has come to the fore. Bangladesh is very careful in making decisions based on these two countries.
Besides, the United States is criticizing Bangladesh quite harshly on issues of democracy and human rights. Bangladesh is not willing to accept its criticism, although it is said that Bangladesh is focused on maintaining good relations with all countries.
Meanwhile, the import policy of the United States has been arranged in such a way that the export income of Bangladesh to the United States has decreased by about 12 percent in the last year.
Earlier, due to some restrictions given by the US and the recent visa policy, the money of Bangladeshis is coming to the country in the form of remittances from the US and the remittance flow increased suddenly from the US.
The report said Bangladesh is already dealing with the negative impact of price-hiked goods in the global market and the disruption of the supply system due to the effect of the Russia-Ukraine war. Its effects are still there.
The global economic slowdown caused by the war`s impact is still hitting Bangladesh`s economy. There was instability in the financial sector. Now it has started to ease. The supply of liquidity in banks is increasing.
The Central Bank has expressed optimism that this situation will improve in the coming days.
