Economic crisis in Bangladesh, a concrete analysis

                    Bangladesh, it`s a name of an emerging country in the word. Full name is Peoples Republic of Bangladesh. But the potentiality of this country could not go ahead because of the economic and political instability of this country.

GDP in Bangladesh

It is the fact that the Bangladesh government achieved a diplomatic success by reducing it dependency on foreign funding and loan for the annual development budget from 85% (which was in 1988), to 2% (which was in 2010). The reducing of the dependency has also a reverse effect on the government income source. Recently the World Bank stopped their funding of the `Padma Bridge` construction for the allegation of the corruption in the tender of the construction. Also the government have given the subsidy on the fuel price and on the foods like Rice. So this type of activities decreased the income source of the government. The reverse effect of this kind of activities is like, on average Bangladesh Government has taken Taka 1.4 billion loans from banks every day.

Another reason of the economic crisis of Bangladesh is the increasing Inflation rate. Its means the general rise of the price against the standard level of the people’s purchasing power. The inflation rate is higher among the last 17 years. It is now 11.3 %. It is a red signal for the government from the general public. Deficit balance of trade is another reason for the slowdown economy of Bangladesh. The Import from foreign countries to Bangladesh is 598 Million higher than the export from Bangladesh to foreign countries.

Today’s most significant crisis for the Bangladesh government has been the stock market crash. Short term investors are the major victim for the collapse of the stock market. The government took some incentive package for the stock market investor. The relaxation of rules can attract the institutional investor to invest more funds in the capital market.

Some polishing activities have shown that the financial and the economic collapse of the world could not effect very seriously. The major concern of the Bangladeshi developments is like poverty, health, education etc. The trade and remittance are the most important revenue source of the government of Bangladesh. But the economic crisis in the European countries affects the remittance and the export sector of Bangladesh. The remittance goes down because of the unemployment problem. Also the export sector affected because the buyer could not want to pay the previous rate from the previous agreement. Bangladesh economy very much depended on the RMG (Readymade garments) sector, so after the economic recession in the world the RMG sector of Bangladesh also affected. The growth rate of Export of Bangladesh decreased from 80% to 0% from July 2008 to June 2009. So it was very problematic situation for Bangladesh.

Crises not sustain over the life, it will end but the main challenge for the government is Government have to resolve the main problem. The Bangladesh government should take all the necessary steps to reduce the crisis for improving the economy.

Economic Crisis in Bangladesh and the polishing activities

Bangladesh is a developing country and its economy is highly depended on its RMG (Readymade garments) sector and export sector. Also Bangladeshi economy highly dependent on the loan of the World Bank, Asian development bank etc. The Article is about a concrete study of the Economic crisis of Bangladesh and the reason behind this crisis. 

The economic crisis of Bangladesh comes forward when the inflation rate goes to the double digit. Now the inflation rate is 11.3%. That means the purchasing power of the general people decreased from previous. Bangladeshi Governments did some polishing activities for solving the economic crisis of Bangladesh. It is really a very hard work for the Bangladeshi Government.  The primary reason for the crisis is the government subsidy in the fuel and food. For taken this subsidy the government of Bangladesh took loan from the local bank. This kind of activities decreased the income source of the government of Bangladesh. The economist says that on average Bangladesh government took TK 1.4 billion loan from the local bank. Stock market crisis is another  reason for the crisis of Bangladesh. This is happen because of the lack of the knowledge of the investor of the share market. Short term and the small investor is the major victim of this collapse.  The Bangladeshi Government took some initial step for solving the problem of the share market.

The graph shows trend in exchange rate movements

The economy of Bangladesh heavily depends on the RMG (readymade garments) sector and the export sector, after the financial crisis happened in the world, the RMG and the export sector also affected. The growth of the readymade garments sector decreased 80% to 0% from the month of July 2008 to June 2009. The buyer of the foreign countries could not give much attention, because some countries gave them same product with lower price. Also Bangladeshi economies dependent on the remittance come from abroad. 

Remittance flow

The remittance side also affected because of the unemployment problem in abroad. In July 2009, the growth rate of the remittance inflows was 45%, in August the remittance inflows was 53%, in September  the remittance inflows was 33%, in October, the remittance inflows was 15%, in November, the remittance inflows was 23%, in December, the remittance inflows was 20%, in January, the remittance inflows was 20%, in February, the remittance inflows was 15%, in march, the remittance inflows was 10%, in April, the remittance inflows was 10%, in May, the remittance inflows was 21% and in June 2009, the remittance inflows was 21%. So it was a declining process of the remittance from abroad. This statistics said that the remittance declined 45% to 21% from last one year. So it is very alarming situation for the Bangladeshi government. So it is very challenging work for the Bangladeshi Government to sustain its economy in a good position.

At last, if the government of Bangladesh keep the inflation rate in single digit and attract the buyer by their quality readymade garments products then it will be very grateful work for the Bangladeshi economy.