Resilience should be built to cope with long-term implications

The problem with shocks is that we tend to think of them as short term phenomena and design responses that deal with those short term phenomena. What we have to recognise is that the number of shocks we are facing now are actually deep seated features of both the global system and the domestic economy.

Resilience has to be built with the aim to cope with the longer term implications of shocks which are embedded systemically in the global and national system.

Whatever policies you may put on the table; they have to be implemented.  How effectively they are implemented is profoundly related to the nature of governance, the nature of institutions and above all, the nature of the democratic process.

There are some profound seismic changes going on in the global economy and we have to address those. How we position ourselves now will be of great importance to our future.

The macroeconomic trends which have been creating some concerns and the responses to them now obviously are all very short term while the broader issue is sustaining long-term growth.

How we respond to issues really depends on the structures you have built within the economy.

The traditional macroeconomic responses, which have also been projected in the IMF reform agenda, put emphasis on limiting the size of the budget deficit. Much will depend on how public expenditure resources flow into the economy, in which segments it stimulates demand and the capacity available in those segments.

The goal is to get to a position of significant capacity where underutilised capacities are built into the economy and the injection of budgetary expenditures may actually stimulate the areas that induce growth and not necessarily create inflationary pressures.

Now where these opportunities exist is really a matter of deep research.

The other issue is the problem of the nature of our growing balance of payments and the impact it is having on our reserve. Obviously, we are going to face problems relating to sustaining our exports.

For the economy, where 80% of the exports originate in a single commodity and then massively directed to two regions – the European Union and North America – we are highly vulnerable to shocks which originate outside our control in the growth dynamics.

The other major source of earnings, our migrants, is again both the measure of our limitations as policymakers. This has been the major source of foreign exchange earnings for Bangladesh for close to 35 years now.

While we have rapidly reduced poverty, we have to ask why are so many people compelled to risk life to go to the most remote corners of the world to earn their livelihood? Surely, there is some correlation with the health of the domestic economy.

The way we perceive the role of migration should move away from the whole 'Adam Bepari' theme where traders traffic people abroad and exploit their vulnerabilities.

The fact that we have not recalibrated our approach to how effectively we utilise this resource is a major deficiency.

What I would like to envisage for Smart Bangladesh targeting 2041 is people aspiring to go abroad as legitimate suppliers of services in the global economy – not out of economic compulsion, or desperation. Significant structural gaps and demand for services will emerge globally and Bangladesh should be targeting to leverage that.

In terms of expenditure needs, much depends on the types of expenditures we make and the long term growth potential generated from those.

This government has, commendably, put emphasis on infrastructure. All that may require both in terms of expenditure priorities and the quality of governance is the proper utilisation of resources.

Providing quality education at all levels to every citizen should certainly be one of our major priorities. I would also like to imagine a situation where our policies aim our small farmers to be valued more and the value they add are also more.

We should address the policy.

All these issues end up with the issue of governance. Essential to good governance is the working system of accountability and transparency within the system.

The major structural changes that have taken place in the global economy is the rise of Asia and the gradual depreciation in the economic strength of the West.

While this should be deemed normal, the West now see this as a grave threat to their future. So the West has now initiated the process of de-globalisation and the US is now returning to an era of protectionism and import.

The real problem arising from the Ukraine war is the US and the EU choosing to actually weaponise trade and economic interactions – using economic sanctions in one way or the other to compel behaviour which is not at all acceptable and not in the interest of a great majority of countries.

The new centres of Growth Dynamics are now located in Asia, particularly centred around our two giant neighbours. It should really be the major source of both economic diplomacy and restructuring for Bangladesh.

The growth of Southeast and East Asia has been driven by the strong value chains with China. Today China's main trading power partner is actually Southeast and East Asia, not North America and Europe. The same applies to Southeast Asia, where most countries including Japan, Taiwan and Korea Have China as their main trading partner. We need to correspondingly plug into these value chains.