Zahid Hussain

Dr Zahid Hussain is former lead economist of the World Bank’s Dhaka office.

‘Dhaka inflation was 11.08% last year, highest since 2011’

No policy measure taken to contain high inflation

There has also been very little policy response to help out families at the bottom of the income ladder

1w ago

Policies and reality checks

The beginning of a new year is not just a moment for resolution. We are in a season that is about both reflecting on the past and looking forward to the future.

Foggy stance of BB on exchange rate

A key objective of issuing a monetary policy statement on the eve of the new fiscal year is to provide forward guidance to the public about the likely future course of monetary policy. When credible, individuals and businesses use this information in making decisions about spending and investments.

Foggy stance of Bangladesh Bank on exchange rate

Real wage decline could push low-income families into poverty

Nominal wage growth at the low skill level overall has fallen behind the headline inflation.

Pressure on foreign exchange market likely to continue

The current inflationary pressures are attributable largely to the rise in international commodity prices and the exchange rate depreciation, albeit to a relatively smaller extent. The latest data from the Bangladesh Bureau of Statistics show there was a spike in domestic consumption demand as well.

7.5% Bangladesh GDP growth target set for FY23

Prosperity without clarity

The growth estimate for fiscal 2021-22 appears directionally consistent with the high-frequency growth indicators such as exports, imports, private credit and revenue collections.

Tribute to Muhith: Epitome of optimism

Over the last 50 years of Bangladesh’s existence, we have seen many finance ministers. AMA Muhith was among those few who this nation will remember for making the job appear joyful and free from the pains of balancing difficult trade-offs amid resource constraints.

Inflation: more to come

Inflation is rising in Bangladesh as it is in several advanced and emerging economies. Increased headline inflation in February was driven by a spike in food inflation. The 12-month moving average inflation has been on an upward trend since the November 2019 to October 2020 period.

No one immune from the impact of Russia-Ukraine conflict

The economic damage from supply disruptions triggered by the confluence of events around the Russian invasion of Ukraine would be severe in some countries and industries and less so in others depending on the depth and breadth of economic ties,

Spike in GDP growth: hard to fathom

There was no doubt that the growth in gross domestic product (GDP) in FY21 was better than the growth in FY20 even though the pandemic was present with all its ferocity in both years.

No growth in real wages

The Bangladesh Bureau of Statistics (BBS) data provides a somewhat mixed picture on how labour is benefitting from the ongoing economic recovery in Bangladesh.

Rising inflation creates a trilemma

Consumer price growth has spiked, driven by non-food inflation which is approaching 7 per cent. Inflation in Bangladesh is catching up with global trends. As in the case of the rest of the world, cost-push has been the most important driver which in turn came from increases in energy prices.

Gain some, lose some

Timely revisions to data on GDP and its components determine the accuracy of national accounts estimates and their comparability across countries.

Harnessing potential gains from outward FDI

Corporate Bangladesh is increasingly demanding the easing of draconian restrictions on outward foreign direct investment (OFDI) as they seek to diversify earnings. Indeed, OFDI can yield financial, intangible capability, and tangible capacity returns, thus complementing the development benefits realised through trade, migration and inward FDI.

Budgeting to make a difference

While the pandemic waves on, the budget should focus on crisis management, prioritising spending on health, targeting fiscal support to distressed families and enterprises, restoring the functionality of education, and building on the resilience demonstrated by agriculture while keeping an eye on revenues. A business-as-usual budget like last year will miss the boat again.

Pursuing new approaches to deliver quality education is key

In-person schooling in Bangladesh has remained shut since March 2020. Children have already lost a full year, equivalent to 0.6 learning-adjusted years of schooling based on the learning gap implied by the World Bank (WB) in its Human Capital Index (2020) for Bangladesh.

Activities back, incomes not

We are going through an unprecedented time, which is economically troublesome.

Expectations From 2021: Vaccination, education and sustained economic recovery

The new year always carries the legacy of the year gone by. Expectations for the new year are naturally conditioned by these legacies. This is true every year. But 2021 is starting from an exceptional footing. Preceded by a prolonged 10 months of unprecedented trauma and fear all the world over, 2021 inherits the legacies of a year that will go down in history as the most cursed in last hundred years.

Next budget would be an immense balancing act

Next fiscal is likely to be one of the most challenging years from a fiscal management perspective, among others.

The economics of social distancing

Social distancing has proven to be an effective weapon for dampening the spread of coronavirus.

Next fiscal year’s budget priorities must be aligned with the needs of the pandemic-hit economy

The coronavirus-infected economy requires dealing with the disease burden and the economic devastation caused by measures to contain the virus.

Our sudden and decentralised restart is hard to fathom

Bangladesh’s restart is happening, whether science supports it or not.

Technology is a useful servant. Let’s harness it for social protection, social distancing and community testing.

The government is hard-pressed in responding to the raging coronavirus pandemic with every resource, instrument, policy and strategy it can get its hands on.

Cash transfer is the assistance the poor need right now

Early data on the poverty impact of the coronavirus-induced coma of the economy, as Nobel laureate economist Paul Krugman characterises it, is rather alarming.

We paused the economy to save lives. But how do we press play again?

The historical novelty of the coronavirus shock has unravelled as the lockdown continues. Bangladesh’s economic expansion is projected to face a drastic brake.

Making the bell toll for the poor and the vulnerable

Are we doing enough to support households dependent on labour income from the formal and informal sectors in this time of distress?

Stimulus package geared towards the long road to normalcy

The Tk 72,750 crore package announced by the prime minister promises to provide support to small and large businesses in industry and services to tide over the disruptive stage of the pandemic.

It’s a good package, but its delivery holds the key

This is a good package committing 2.5 percent of GDP to keep businesses in industry and services afloat with a particular focus on protecting employment and labour income.

Coronavirus: Are the policy and community responses adequate?

The government and the Bangladesh Bank have come up with several initiatives in response to the evolving public health and economic crisis.

Bring on fiscal policy

If there ever was a challenging time for fiscal policy, this is it! The budgeting season for the government has started amidst a potential global health and economic crisis whose depth and duration are as uncertain today as when it started.

The narrative on rising inequality

Inequality occupies a salient spot in Bangladesh’s development discourse. Most measures of inequality increased from 2000 to 2016.

Would monetary policy still be useful after 9pc interest rate?

The big question on economists’ mind is, how will the 9 per cent ceiling on bank lending rates impact the conduct of monetary policy?

Financial inclusivity and the banking sector

Financial reforms have been on a reverse gear in Bangladesh. The latest being the announcement to return to a regime of interest rate repression.

In Bangladesh Bank we trust

This ought to be, if it already is not, the motto of stock market players in Bangladesh. Bangladesh Bank (BB) has left no stone unturned to show that it stands ready to put lipstick on everything to drive stock markets higher.

Treasury bills: a double-edged sword

The surge in public borrowing from banks has significantly elevated the risk of further reducing the availability of credit to the private sector through two channels. One channel is through reducing the availability of liquidity for lending to the private sector. The other channel is interest rates.

The 9 per cent cap will hurt the financial inclusion agenda

Banks prefer to work with large national and multinational business groups and the government, which offer less risk and higher returns.

What is riding on remittance?

Thinking about the role of remittance in our economy often makes us think about growth and standard of living.

NEW MONETARY POLICY: Nothing really new except renewal of old worries

The Bangladesh Bank (BB) has adjusted the monetary programme for the current fiscal year. Although the adjustment is limited to just one component, it is a big one.

Alternative facts and contradictory policies

Like dead characters in Hollywood and Bollywood movies, paradoxes seem to reappear in Bangladesh’s economic landscape more often than analysts would like. Here are two new arrivals:

Revisiting the devaluation debate

The debate on taka devaluation is a debate on whether the exchange rate is currently overvalued. How do we know?

The economics of remittance growth

Most economic indicators on the state of the Bangladesh economy during the first half of FY20 are down with one big exception—remittances.

How well founded are the devaluation worries?

In an interview published in this newspaper on January 3, the finance minister stated unequivocally “no currency devaluation”. Is such a sweeping stance compatible with the government’s own economic policy objectives?

Back to square one

It’s deja vu all over again. On June 21, 2018, Bangladesh Association of Bankers (BAB), a platform of private banks’ owners, agreed to cap the interest rate on deposits at 6 percent and the lending rate at 9 percent from July 1, 2018.

Bangladesh Bank headquarters is seen in Dhaka

Missing the cause for the symptoms

The stock of non-performing loans (NPLs) is increasing in both public and private banks. This is raising the threat to financial stability, impairing financial intermediation and damaging the resilience of the banking sector to shocks, thus increasing systemic risk. NPLs are also associated with higher funding costs and a lower supply of credit. However, the recent hot debate in Bangladesh has centred on whether high NPLs are a cause or a consequence of high lending rates.

Bon voyage, Bangla Bond!

Bangladesh needs to boost private investment from the current 23 percent of GDP to nearly 30 percent to accelerate and sustain growth as it moves up the middle-income path and strives to achieve the Sustainable Development Goals.

Encouraging progress, still long way to go

Bangladesh has made encouraging progress on the World Bank’s Ease of Doing Business (DB) 2020. The rank has improved by 8 places to 168 from 176 a year ago.

A toxic sundae

Bangladesh’s stock markets have been fluctuating sharply in recent years.

January 30, 2017

Cautionary monetary policy

Overall, the monetary policy statement is appropriate for the current state of the economy.

February 2, 2016

Risks and challenges of the economy in 2016

Bangladesh enters 2016 with its economy facing several challenges. The key challenges on the domestic front continue to be the acceleration of private investments and the better use of public sector resources to implement important infrastructure and social programs. The investment outlook is clouded by uncertainties pertaining to the dynamics of domestic politics; structural reforms; developments in infrastructure and energy; and global economic prospects.

January 15, 2016