The Financial Express

Hope and despair herald 2022

| Updated: January 01, 2022 13:21:21

Fireworks exploding over Sydney Harbour during New Year's Eve celebrations in Sydney of Australia on Friday -Reuters photo Fireworks exploding over Sydney Harbour during New Year's Eve celebrations in Sydney of Australia on Friday -Reuters photo

Bangladesh joins humanity to welcome 2022 with mixed feelings of hope and despair as lingering shadows of coronavirus impact long-term rosy macroeconomic and socioeconomic indicators despite a rebound from disruptions.

As people ring in the dawning New Year on the Thirty Fast with high hopes for a better luck, economists and analysts air guarded optimism that high inflation, non-performing loan (NPL) with banks, inequality, investment, unemployment, and poverty scenarios could cause some discomforts in 2022, too.

However, there is no lack of foretelling that should the pandemic virus die out in the end after its winter resurgence in the West, there could be a surge in economic activity, in all spheres of life in new normal from the new year that begins today.

From this ambiance in the air, people are celebrating the New Year's Day with fireworks, blasting firecrackers, colorful lightings, partying on the Thirty First night.

Expert views say the post-Covid economic recovery would be the main challenge for the government.

According to government's statistical department, the inflation is going to be a big challenge for the country to bear with as it has been maintaining a steep rise over the last four months amid higher prices of oils and some other daily essential items.

The Bangladesh Bureau of Statistics (BBS) shows that the point-to-point inflation has been on a crescendo since last August.

The point-to-point inflation rate was recorded 5.36 per cent in July and it rose to 5.54 per cent in August, 5.59 per cent in September, 5.70 per cent in October and 5.98 per cent in November 2021.

The International Monetary Fund (IMF) in its last Article-IV mission recommended for the Bangladesh Bank (BB) to keep inflation broadly stable.

It also suggested the central bank to monitor inflation developments closely and stand ready to adjust its policy promptly, if warranted, as the "inflation expectations remain elevated".

The IMF has urged the BB to continue efforts to gradually increase exchange-rate flexibility to help buffer the economy against external shocks, preserve foreign reserves, and support the modernization of the monetary-policy framework.

Another multilateral development financier, the Asian Development Bank (ADB), has also forecast higher inflationary trend across the globe, as a demand surge outstrips supply constrained by both production and transportation problems.

The Manila-based lender in its Asian Development Outlook says the inflation rates remained highest in Central Asia, at 8.3 per cent in June, on currency depreciations in some economies, followed by South Asia, at 6.5 per cent. The rate in Southeast Asia was 2.2 per cent in June and 1.3 per cent in East Asia.

"Rising global commodity prices this (past) year are reflected in regional inflationary dynamics to varying degrees across the sub-regions," it cautioned.

Meanwhile, the country's financial sector is entering into the new year 2022 with a higher NPL trajectory.

The volume of NPLs grew by nearly 14 per cent or Tk 124.16 billion to Tk 1011.50 billion as of September 30, 2021, from Tk 887.34 billion as of December 31, 2020, the central bank latest statistics show.

Although the NPL is rising, the BB Thursday relaxed further the loan-repayment policy for all the sectors which, economists think, could make the country's financial sector more vulnerable.

Under the relaxed stance, the borrowers will get a fresh chance to remain unclassified if they repay a minimum of 15 per cent, instead of previously set 25 per cent, of the total outstanding amount of loans for the whole calendar year by December 31, 2021, the BB notified.

Meanwhile, the slow progress on projects, especially the mega-and fast-track ones, is also a big challenge for the government as their time and cost have already overrun many times beyond the preliminary official estimation and project implementation timeline.

The only hope is the Padma Bridge and Metro-rail line-6, which are expected to be launched for the public middle of this new year and at the yearend.

Other fast-track projects, including the Pyra Port development, Rooppur nuclear power plant, Karnaphuli tunnel, Dohazari-Cox's Bazar-Ghundum railway track, MRT line-1 and MRT line-5 are still on the slow lane.

Although the government is trying to complete all the mega-and fast-track projects before expiry of its five-year tenure in 2023, those would neither open for the public within this new year 2022 nor in the next.

The country has also entered into the new year 2022 with lower investment and higher unemployment situations.

Besides, the higher poverty rate due to the impact of the Covid-19 has also posed a big challenge for the government in the new year.

The long-struggling poor investment, higher poverty rate and the newly emerged unemployment rate would be on the main-challenge front in the new year as millions of people lost their jobs, fell under the poverty line.

The investment-to-GDP ratio had also fallen both in the past two fiscals--FY2020 and FY2021-- as it was estimated at 31.31 per cent and 30.76 per cent respectively.

The Covid-19 impact has also slowed down Bangladesh's higher economic growth in the last two fiscal years.

In the last FY2021, the government's national statistical body, BBS, estimated the GDP- growth rate at 5.43 per cent.

The economic growth rate fell sharply in the previous FY2020 when the economy faced a severe coronavirus outbreak. In FY2020, the BBS estimated a 3.45-per cent economic growth.

Although the fiscal year between July and June is familiar from the economic and financial fronts, the new Gregorian year 2022 is very important for the country as well as for the entire world community.

The new coronavirus variant -Omicron--higher global oil prices, uplift in international inflationary trend, increased prices of the essential items in the domestic markets, the low base of investment and employment will be the challenging factors for the government in the new calendar year 2022.

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