Dealing with effects of global economic crisis
AT long last, we have an expert view urging the government to set up what we see as a radar screen of our own to monitor the world economic crisis threatening to aggravate into recession, and God forbid, into depression, with their likely knock-on effects on the economies of developing countries. At a CPD discussion meet on "The global financial crisis and what it means for Bangladesh", policy makers, economists and analysts demanded in one voice that a high profile committee be formed in line with the gravity of the unfolding situation to mitigate its spillover effects on our economy.
This finds a resonance with us almost instantly; for, in two previous editorials on the subject we had underscored the need for a clear-cut approach to the issue based on a serious perception of the possible ramifications rather than holding on to a mixed view that being insulated from the world economy we are likely to be negligibly affected. The CPD dialogue has clearly brought up the fact that Bangladesh would not be immune to the global financial meltdown and its negative spillover.
In broad strokes, as far as we can see, revenues from merchandise, services and manpower exports might shrink from a deep slide in consumer demands in the developed world; flows of foreign aid and FDIs could decline; and we might face the challenge of revaluing taka vis-à-vis dollar raising the twin issue of importing at higher costs and exporting at reduced values.
On the positive side, the lower global demand could trigger fall in oil prices leading up to decline in food and commodity prices. At least, these would be stable with the benefit of a fall in inflation rates.
We need a two-pronged strategy here; one is to minimise the negative effects by taking appropriate adjustment measures and the other concerns itself with obtaining the gains from the positive trends.
The competent taskforce that top economists have in mind is to include all the major stakeholders including politicians who are poised to run the country after the elections due in a few months' time. With the Bangladesh Bank Governor supporting the idea wholeheartedly, it remains for the government to put such a taskforce in place in consultation with the major political parties without further loss of time.
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