The New Nation - Internet Edition

THE present global financial crisis has engulfed some big economies including those of the G-7 countries. The crisis is likely to hit the Bangladesh economy marginally if it prevails for a short period; but a prolonged and deeper recession will have a strong negative impact on the economy. The capital market is considered safe in the main as it has very little linkage with foreign portfolio investment. However, impacts of a prolonged crisis mainly on the exports, remittance, foreign aid, and investment are not ruled out. Inward flow of remittance has already started showing a downward trend from American and European countries as expatriates are compelled to spend more to meet basic needs. Against this perspective, a technical committee appointed to monitor the impact of the global crisis and make necessary recommendations has started working.

Bangladesh's export earning depends on a few items ranging from primary goods to industrial products. The highest amount of foreign exchange is earned from remittance made by Bangladeshis working abroad and from the export of readymade garment. More than three-quarters of the country's export earnings reportedly come from the US and European markets that have already been affected by the economic meltdown. The two vital sectors of export are likely to be affected by the economic ups and downs in these countries. Steps are needed to expand the precariously narrow export base on the basis of a detailed study of foreign markets. Ways should be evolved to increase export both in quantity and quality. The export-oriented industries are likely to be more vulnerable to global economic instability. Priority should thus be given to exportable items that also have domestic demand.