Economic prospects look bleaker with high inflation persisting for long

As Bangladesh welcomes the new year, an ominous challenge looms large on its economic horizon-the soaring inflation. Surpassing 9 per cent, this unwelcome threat destabilises the nation’s economic foundation.

The roots of this economic malaise trace back to June 2022, when the global ramifications of the covid-19 pandemic and the Russia-Ukraine war triggered a spike in commodity prices, significantly impacting import-dependent nations like Bangladesh.

This is the peak winter season, but the sordid market reality is potatoes are selling at Tk 60 per kg at the retail market in the capital.

Other winter vegetables are also selling at high prices that are beyond the capacity of the most people.

To tackle this crisis of high inflation that is persisting for a long time, the government must deploy a mix of conventional and non-conventional tools, emphasising the need for stringent monetary policies and a comprehensive fiscal strategy.

A key contributor to Bangladesh’s inflationary challenge is the devaluation of the taka against the US dollar, resulting in imported inflation.

Additionally, there is a crucial emphasis on increasing social benefits for those most vulnerable to inflation, particularly in rural areas where the inflation rate hovers at double digits, with food inflation close to 12 per cent.

To counterbalance this deficit, experts recommend attracting foreign direct investment (FDI) and stressing the need for political stability to restore confidence among investors.

Looking ahead, carefully considering the exchange rate is urged, suggesting alignment with market-based rates. But would the relevant policymaker pay heed to them?

As the nation grapples with inflation, leaders and policymakers must underscore a delicate balance to protect the vulnerable, foster economic stability, and pave the way for sustainable growth.

The road ahead demands strategic decision-making and a collaborative effort to secure Bangladesh’s economic future.

Now is the time for decisive action to navigate these turbulent economic waters and steer the nation towards prosperity.

Without a political settlement, and setting up accountability mechanisms, we cannot settle the inflation issues as the vested quarters are behind the inflation and the government is not harsh to them.

Bangladesh reached a crossroads, where we must decide our destination in terms of economics, business environment, politics, rights and democracy.

The future is beginning now and our actions matter for the next generation whether they will live in a democratic society or a dystopian society.