A time series analysis on reserve asset growth of Bangladesh  

Published: September 18, 2017 21:40:11 | Updated: October 24, 2017 09:57:19


BANGLADESH has been maintaining a healthy foreign exchange reserve over the last decade. Although the reserve plummeted in 2010 and 2011, it recovered immediately. The reserve reached its peak in FY 2012-2013. Most of the credit for this is due to the migrant workers who send home remittances. In addition to swinging back to its old reserve, Bangladesh successfully retained the figure of migrant employees overseas even after restrictions imposed by Malaysia and Saudi Arabia. Unfortunately, the reserve balance again recorded a fall of 62.92 per cent in the last fiscal. The situation was termed as unsatisfactory by the International Monetary Fund (IMF). But Bangladesh still maintains a secure position in terms of its foreign exchange reserve. In FY16, remittances dropped to $15 billion (6.8 per cent of GDP) from $15.25 billion (7.9 per cent of GDP) in FY15. Foreign exchange inflows are predicted to drop further by almost 17 per cent in FY17, as British garment importers have started putting price pressures on exports from Bangladesh following the announcement of Brexit. Bangladesh, however, has the experience of withstanding similar pressures of fluctuations in its foreign exchange earnings. Balance of payments of the country for the last 20 years bears testimony to this.

 

Nusrat Amin

Student of EMBA (IB Dept)

University of Dhaka

nandini_amin2000@yahoo.com

 

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