Dhaka, Bangladesh (BBN) – Bangladesh’s economy is showing signs of turning around as the opposition alliance led by Bangladesh Nationalist Party’s chairperson Khaleda Zia has taken a pause in its agitation against the Sheikh Hasina government.
Since the Jan. 5 parliamentary election, which was said to be unfair and internationally unaccepted, the opposition has stopped street protests giving the economy a chance to rebound, the Arab News reported.
However, reports of massive rigging in local bodies’ polls recently held in phases has once again triggered violence and might hinder the economic recovery.
Bangladesh economy has suffered a heavy loss from the prolonged political unrest. During the second half of 2013, at least 55 days of shutdowns, blockades and strikes were enforced, which cost the country over $6.7 billion, equivalent to 4.7 percent of the country’s GDP earmarked for the fiscal year 2013.
These figures, according to the Center for Policy Dialogue (CPD), are related to only four major sectors like garments, transportation, agriculture and tourism. revenues have also plummeted conspicuously.
The ready-made garments (RMG) sector was the hardest hit with a loss valued at nearly $2.1 billion. This sector saw overseas buyers’ orders drop sharply for the 2014 summer due to political impasse last year and many buyers were lured away by other competitors.
The RMG sector has catapulted the country into the world’s second largest supplier of textiles and clothing after China, representing over 80 percent or $21.5 billion of the country’s total annual exports of $27 billion.
Apart from political crisis, Bangladesh garment industry is beset with manifold problems such as frequent labor unrest and a number of recent disasters in factories, which prompted foreign buyers to rethink their sourcing options from Bangladesh citing inadequate safety standards for workers.
The , the largest single-country consumer of Bangladeshi garments, has already suspended its trade privileges under the Generalized System of Preferences (GSP) and there is no sign in sight to lift this restriction.
The European Union, which buys nearly 60 percent of Bangladesh garments, is said to be considering waiving GSP privilege for Bangladesh as it is pushing the government to improve standards.
Bangladesh RMG also awaits a stiff competition in EU as a number of countries like India, Pakistan and Vietnam are soon likely to have duty-free access to the European markets akin to Bangladesh.
Foreign remittance flow has gone down significantly for the first time in Bangladesh history since its independence in 1971. According to the Bangladesh Central Bank, foreign remittance volume contracted by $1 billion to less than $14.1 billion in 2013, as compared to the previous year.
This downward trend in foreign remittances has been mainly attributed to Bangladesh’s foreign policy doctrine said to be largely tilted toward a single country with a little concentration on further improvement of bilateral ties particularly with the Middle Eastern countries and internal political chaos.
Several GCC countries have stopped deployment of Bangladeshi workers. Saudi Arabia, the largest recruiter, and Kuwait have not hired Bangladeshis, with few exceptions, for the past five years and the United Arab Emirates (UAE) has put a stop to importing Bangladeshi workers since September 2013.
Moreover, many Bangladeshis have returned home following recent crackdowns on illegals in Saudi Arabia and Malaysia.
Surprisingly, India is the largest remittance taker from Bangladesh. Based on a report from the Silicon India, India fetched over $3.7 billion from Bangladesh as remittances, constituting around 5 percent of its total incoming remittance flow of over $71 billion a year. With many Indian business enterprises flourishing rapidly in Bangladesh, over half a million Indians now live and work in the densely populated South Asian country of 160 million people.
Bangladesh’s economic recovery is feared to be short-lived. The opposition seems taking a deep breath for mounting final assault for an early election through a series of blockades and shutdowns, which would inevitably drag the economy down.
BBN/SSR/AD-29Mar14-11:59 am (BST)
