Economy buffeted by political unrest amid declining forex reserves: Analysts

Business Desk :
The ongoing political and labour unrest has hit the country’s economy at a wrong time.
Since September 28 the BNP-led opposition has imposed on-again off-again nationwide hartals and blockades to press for resignation of the government paving the way for a free and fair election under a non-partisan caretaker government.
The situation has been compounded as the political unrest coincides with continuing protests by garment workers for hiking their wage.
The protests have been marked by clashes with police, casualties and torching of vehicles, mainly buses.
The anti-government protests has hit the country even as the economy, smarting from Covid-19 setbacks, is struggling with the foreign exchange shortage, the value of taka sliding over 30 per cent, double-digit inflation, the high price of energy and labour unrest cantering salary hike, economists say expressing worries, reports UNB.
Bangladesh Bank has recently held discussions with prominent economists and its former governors on the ways to overcome the situation.
The invited economists suggested policy changes to overcome the US$ dollar crisis, a stable exchange rate and reduce the inflation at a tolerable level, according to sources familiar with the talks.
The labour unrest for higher wage in the garment sector is also solvable by the RMG owners and policymakers of the sector, they opined.
But the economists and businesspeople felt that they have little to say about the political unrest except suggesting a consensus among the political parties on how to hold the next election which may be held by first week of January.
Talking with UNB former senior economist of the International Monetary Fund (IMF) Dr Ahsan H Mansur said the political conflicts are pushing the economy towards great uncertainty.
Until there is a peaceful solution to the impasse on the upcoming national election, this situation may continue having dire economic and social consequences.
“But so far there is no sign of flexibility in the attitude of politicians. Disruption of production activities for a few days can be a long-term effect. This will lead to an adverse effect to inflationary pressures, dollar crisis, and employment opportunities,” said Mansur.
Export-import, private sector credit growth, remittance inflow, investment, jobs creation, GDP growth, revenue collection, and all other sectors will be affected by this political uncertainty, said Mansur, who is also chairman of Policy Research Institute (PRI), a private think tank.
He said a key source of the country’s foreign exchange income is the export sector. An average of $5 billion a month comes from the export of goods.
Exports of goods fell by 14 per cent in October compared to the same month of the previous fiscal year, he pointed out.
Garment exports fell by 13 per cent in October compared to September. Exports worth $3.76 billion were earned in the month in October FY2023-24. That is $600 million less than the same month FY2022-23.
FBCCI president Mahbubul Alam said traders are worried about the strikes and blockades. This is seriously disrupting the product supply system. This has led to hike in the prices of many items,
He said the businesspeople feel that there should be a political compromise anyway. Everyone has to consider the economy and the interests of the country.
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Faruque Hasan told UNB that amid the election-centered conflict and recent labour unrest the buyers of Bangladeshi products are expressing concern.