Private sector weathers out shocks, so far

Unlike other countries, banks in Bangladesh have made hefty profits and exports continued to grow, while internal consumption has also been on the rise.
The economy grew by nearly 6 percent in fiscal 2008-09 and is expected to expand further this year. Exports increased by nearly 12 percent to $15.56 billion in 2008-09 compared to the previous year.
Export data for different sectors in the current fiscal year shows agro-processed foods, terry towels, leather bags and purses and footwear have continued to earn more this year. Also manufacturers of ceramics tableware, bicycle and even handicraft have brought in more.
According to provisional statistics of Export Promotion Bureau (EPB), export earnings posted 18 percent growth in October, compared to the same month last fiscal year.
Exports fetched $1.024 billion or nearly Tk 8,000 crore in October, while earnings were $0.87 billion (Tk 6,080 crore) in the same month last year.
In October last year, exports dipped 7.48 percent when the impact of global financial crisis was felt for the first time in the country's export sector.
Knitwear and woven garments that account for 75 percent of total exports were also able to maintain their growth trend in the first four months of the current fiscal year.
Growth in import also shows positive trend in the current year. Bangladesh spent a total of Tk 154,821 crore for imports in fiscal 2008-09. The average monthly spending was Tk 12,901 crore. Latest figures show import expenditure increased to Tk 12,524 crore in September this year from Tk 10,926 crore a month ago.
Financial sector and capital market have performed well throughout the year.
Most of the banks made handsome profits at the end of the third quarter of 2009 riding on their income from stock market-based business.
This happened at a time when the world was passing through such an economic slowdown that people did not witness in the last 40 years.
Economist Prof Wahiduddin Mahmud said Bangladesh has recently become a subject of research and analysis for the international researchers because of its extremely good resilience amid a lot of domestic and international problems.
What are the reasons? How could the export-oriented economy survive the recession? What has shaped the country's ability to respond to the crises?
The credit goes mostly to the entrepreneurs, especially the young ones. Private sector has attributed Bangladesh's success to three major reasons: Entrepreneurs' capacity to adjust faster with the changes in the international market scenario, productivity increase and reduction in rejection rates.
Businesses also credited government policy responses, including loan rescheduling and rate cut, made relatively quicker this year.
“Entrepreneurs' ability to react to the changing market scenario was faster and better than many countries',” said Syed Nasim Manzur, managing director of Apex Adelchi Footwear that has sustained its export growth quite well in recession.
The other reasons he gave are productivity increase and a significant reduction in product rejection rate.
“Private sector here did not wait for the government bailout as it happened even in many developed countries. They (entrepreneurs) have responded quickly by producing low-end items to cope with the market demand,” said Nasim.
Manufacturers of terry towel that continues to perform well in the export market also said their quick responses helped them increase the export growth in fiscal 2008-09 and in the first quarter of 2009-10.
“We started producing low-cost items from the last quarter of 2008 following the recession and a decline in purchasing capacity of the developed world's clients,” said JA Ansari, managing director of Jaantex Industries that exports terry towel.
Bangladesh bagged $132.57 million from terry towel export in 2008-09 and the income stood at $37.35 million in the first quarter of the current fiscal year.
The banks were shielded from the recession impacts, as those were not exposed to global financial markets, said Anis A Khan, managing director of Mutual Trust Bank.
“Our exporters targeted the lower-end buyers in the recession-affected economies,” Khan said.
He said the exporters' margin has come down significantly, but they pushed it up by increasing volume.
Central bank Governor Dr Atiur Rahman attributed this resilience capacity to the country' young entrepreneurs who always like to take challenges.
Rahman said some government steps such as doubling the export development fund and utilisation of additional reserve for other purposes were also supportive.
But some downside risks remain: Industrial sector's output declined to 5.9 percent in fiscal 2008-09 from 6.8 percent a year ago, while services sector registered a lower growth at 6.3 percent that was 6.5 percent in 2007-08.
[email protected]