ICC Bangladesh endorses avoiding hard loans, cutting luxury goods’ import
ICC Bangladesh strongly endorsed the finance ministry's recent recommendation to avoid hard loans and discourage the import of luxury goods in order to reduce pressure on declining foreign exchange reserves.
The leading chamber also endorsed the recent austerity and regulatory measures taken by the government and Bangladesh Bank aimed at curbing non-essential imports, suspending the implementation of projects with high import components.
"We believe this will send a positive signal to the market and the economy as well as curbing inflation," said ICCB President Mahbubur Rahman.
He spoke while presenting ICCB Executive Board Report at its 27th annual council held in Dhaka today.
ICCB also supports the demand of the businesses not to increase the power and gas rates, fuel prices as well reduce the corporate rate taxes during the upcoming budget as these will be helpful in containing the inflation, the ICCB president said.
The report mentioned that over the last two years, the pandemic has played a major role in shaping the global economy. Many sectors have found themselves in difficulty and are still struggling and the countries dependent on those sectors are now quietly trying to get back up again.
Despite the strong economic recovery in 2021, the financial difficulties are not over and may still cause economic slowdown, according to chamber.
In addition, many countries are faced with an increasing debt burden, high inflation and burning issue of the moment, geopolitical tensions, which all play a major role, it said.
The global economy is poised to be sent on yet another unpredictable course by Russia-Ukraine war.
This war is a major humanitarian crisis affecting millions of people and a severe economic shock of uncertain duration and magnitude.
The magnitude of the economic impact of the war is highly uncertain and will depend in part on the duration of the war and the policy responses, but it is clear that the war will result in a substantial near-term drag on global growth and significantly stronger inflationary pressures, the report added.
The Executive Board Report observed that the Russian invasion of Ukraine poses the most severe risk to developing Asia's economic outlook.
The war is already affecting economies in the region through sharp increases in prices for commodities such as oil and has heightened instability in global financial markets.
The Covid-19 continues to impact many parts of developing Asia, with some economies experiencing new surges in cases.
Bangladesh's journey of 50 years since its independence in 1971 has been tremendous and to many it is a 'land of impossible attainment'.
The dominant narrative of Bangladesh has been of an economic miracle and the country's impressive score card is built on her success in terms of attaining a consistent high pace of economic growth and an impressive performance with regard to various development indicators, including those relating to the millennium development goals (MDGs), the ICCB president said.
The success in economic growth has led to Bangladesh's dual graduation – the graduation from a low-income to a lower middle-income country in 2015, according to the World Bank criterion and eligibility for graduation from the group of least developed country to a developing country status in 2018, according to United Nations criteria, the report added.
According to World Economic Forum since its founding in 1971, Bangladesh has emerged from overwhelming poverty to be proclaimed by the World Bank in 2020 as 'a model for poverty reduction', Rahman said.
It achieved the highest cumulative GDP growth globally from 2010 to 2020 and is now on course to become a developed country by 2041, he said.
Bangladesh, like other countries, faces the daunting challenge of fully recovering from the Covid-19 pandemic, which has constrained economic activities and reversed some of the gains achieved in the last decade.
"We have to remember that worldwide, trade is a key tool of development that has led to globalisation. Various research institutions and experienced economists citing post-graduation challenges, apprehend serious hurdles on its elevation, if Bangladesh fails to devise smooth transition strategies for confronting the challenges posed by this transition."
Three major economic challenges, all tied to one another, as observed by experts include a persistent higher rate of inflation, the upward trend of the foreign exchange rate, and a deepening liquidity crunch in the banking sector.
Besides these challenges, Russia-Ukraine war will also affect Bangladesh's economy. Bangladesh is already feeling the heat of the Russia-Ukraine war in many ways.
If the war continues for a longer period, the impact will intensify. The country is feeling the impact through reduction in exports and rise in import bills.
Being an oil-importing country, Bangladesh is already feeling the pressure through high import payments, the report cautioned.
The council approved the Auditor's Report of 2021 and appointed auditor for the year 2022, the ICCB press release said.
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