IMF forecasts Bangladesh needed appropriate steps to combat inflation
The forecast for Bangladesh’s economy in the latest ‘World Economic Outlook’ report by the International Monetary Fund (IMF) is worrying. It clearly indicates how devastating the ongoing war situation in the Middle East and the resulting geopolitical instability could be for a developing country like Bangladesh.
The impact of the war will intensify the global energy crisis; the IMF says, it will have a direct impact on our commodity prices and overall living standards. It is feared that the inflation rate due to the war could increase to 9.4 percent by the end of the current fiscal year.
It says, this crisis will not be limited to market prices, but it could also shake the foundation of the country’s macroeconomics. A large deficit in the current account of foreign exchange will arise due to a decrease in export earnings and remittance flows, as well as an abnormal increase in import costs.
Needless to say, this forecast is a bad omen for the country’s limited-income people. If the supply of fuel oil is disrupted, not only transportation costs but also agricultural and industrial production will face an extreme crisis, the ultimate burden of which will be borne by ordinary consumers.
The severe dollar crisis will lead to a depreciation of the local currency and it will lead to subsequent increase in the price of imported goods, which will not be easy to break. The increase in unemployment and the decline in people’s purchasing power could also lead to social unrest, which in turn will intensify domestic political pressure.
In this situation, our policymakers need to take very quick and effective steps to deal with this global storm. It is the demand of the hour to adopt an emergency economic strategy, avoiding the traditional bureaucratic slowness.
Thus, to ensure energy security, we need to think now about the best use of domestic sources and alternative markets for imports.
To protect the lower and middle class from the scourge of inflation, the scope of social protection programs must be expanded and strict monitoring of market management must be ensured.
Encouraging remittance flows to keep foreign exchange reserves stable has become inevitable.
It is also necessary to ensure the economical use of every dollar by limiting unnecessary government expenditure and the import of luxury goods. It should be remembered that this IMF report is a warning to us.
We can only deal with this multifaceted pressure by ensuring good governance and restoring transparency in every sector of the economy. We hope the government will strive to take timely decisions realizing the gravity of the situation.
