Inflation, debt crisis biggest threats for Bangladesh: WEF

Staff Reporter :
Bangladesh may face five major risks– sustained inflation, debt crises, severe commodity price shocks, human-made environmental damage and geopolitical contestation of resources– in the next two years, according to a report of the World Economic Forum (WEF).
The report presents the results of the latest Global Risks Perception Survey (GRPS) based on insights on the evolving global risks landscape from over 1,200 experts across academia, business, government, the international community and civil society.
Responses for the GRPS 2022-2023 were collected from September 7 to October 5, 2022, the report said.
The survey participants were asked, “Which five risks are the most likely to pose the biggest threat to your country in the next two years?” and were asked to select these from a list of 35 risks.
In Bangladesh, the Centre for Policy Dialogue was the partner of the WEF for the survey and rapid and or sustained inflation was selected as the most frequently selected risk here, according to the report which was released at a time when inflation was easing in recent months hovered around 9 per cent.
In December, consumer prices, which rose to a 10-year high in August, rose 8.71 per cent on point to point basis, according to the Bangladesh Bureau of Statistics.
CPD’s Research Director Khondaker Golam Muzzam told The New Nation on Thursday, “The country’s inflation is largely dependent on imports. As per the reality of the global economy, there is little chance of a reduction in inflation in the first half of 2023. The exporters are meeting their own needs first and then exporting due to the uncertainty.”
“Besides, the pressure on local market may continue as the supply system has not been fully normalized yet due to the Russia-Ukraine war and the country’s imports are controlled by some businesses,” he said.
He further said that major causes of food inflation in the local market are the rise in the exchange rate of dollar and fuel oil price.
According to a report of Economic Relation Division of the Finance Ministry, Bangladesh will have to pay foreign debts worth $2.78 billion in the current fiscal year (2022-23) and the highest $5.15 billion in the fiscal year 2029-30.
Regarding the foreign debt, Moazzem, said, “Debt crisis would be the highest risk for the country, if the survey was conducted at the moment. The government’s efforts to deal with the debt crisis are actually a time killing. It is not to meet our demand.”
All the international organizations including World Bank are saying that the pace of world economy will reduce further in the current year. Even if there is no recession, people’s incomes will decrease due to slower growth. It will impact on the Bangladesh’s economy.
This year’s Global Risks Report finds that cost-of-living crisis, natural disasters, extreme weather events and geo-economic confrontation are the top three risks the world would be facing in the next two years.
Failure to mitigate climate change Erosion of social cohesion and societal polarization are the two major global risks for the short term.
The report said the return to a “new normal” following the Covid-19 pandemic was quickly disrupted by the outbreak of war in Ukraine, ushering in a fresh series of crises in food and energy – triggering problems that decade of progress had sought to solve.
“We have seen a return of older risks – inflation, cost-of-living crises, trade wars, capital outflows from emerging markets, widespread social unrest, geopolitical confrontation and the specter of nuclear warfare – which few of this generation’s business leaders and public policy-makers have experienced,” the report said.
These are being amplified by comparatively new developments in the global risks landscape, including unsustainable levels of debt, a new era of low growth, low global investment and de-globalization, it added.