The International Chamber of Commerce – Bangladesh (ICCB) has expressed its strong support for the finance ministry's recent recommendation to avoid hard loans and discourage the import of luxury goods as this may reduce pressure on our declining foreign exchange reserves.
ICCB also endorsed recent austerity and regulatory measures taken by the government and the Bangladesh Bank for curbing non-essential imports and suspending the implementation of projects with high import components, said a press release from the organisation yesterday.
"We believe this will send a positive signal to the market and the economy as well as curb inflation," said ICCB President Mahbubur Rahman while presenting the ICCB Executive Board Report at its 27th Annual Council held in Dhaka on Saturday.
"ICCB also supports the business community's demands for not increasing the prices of power, gas, and fuel as well as reducing the corporate taxes in the upcoming budget as these will help contain the inflation," said the ICCB President.
The ICCB report mentioned that over the last two years, the pandemic has played a major role in shaping the global economy. Many sectors have found themselves in difficulty and are still struggling and the countries dependent on those sectors are now quietly trying to get back up again.
Despite the strong economic recovery in 2021, the financial difficulties are not over and may still cause an economic slowdown. In addition, many countries are faced with an increasing debt burden, high inflation, and geopolitical tensions, which all play a major role.
The global economy is poised to be sent on yet another unpredictable course by the Russia-Ukraine war. This war is a major humanitarian crisis affecting millions of people and may cause a severe economic shock of uncertain duration and magnitude.
The magnitude of the economic impact of the war is highly uncertain and will depend in part on the duration of the war and the policy responses, but the war will albeit result in a substantial near-term drag on global growth and significantly stronger inflationary pressures, the report added.
ICCB's Executive Board Report observed that the Russian invasion of Ukraine poses the most severe risk to developing Asia's economic outlook. The war is already affecting economies in the region through sharp increases in prices for commodities such as oil and has heightened instability in global financial markets. Covid-19 continues to impact many parts of developing Asia, with some economies experiencing new surges in cases.
Bangladesh, like other countries, faces the daunting challenge of fully recovering from the Covid-19 pandemic which has constrained economic activities and reversed some of the gains achieved in the last decade. The country has to remember that worldwide, trade is a key tool of development that has led to globalisation, said the report.
Various research institutions and experienced economists citing post-LDC graduation challenges, apprehend serious hurdles to its elevation if Bangladesh fails to devise smooth transition strategies for confronting the challenges posed by this transition.
Three major economic challenges, all tied to one another, as observed by experts include a persistently higher rate of inflation, the upward trend of the foreign exchange rate, and a deepening liquidity crunch in the banking sector.
Besides these challenges, the Russia-Ukraine war will also affect Bangladesh's economy as the country is already feeling the heat of the Russia-Ukraine war in many ways. If the war continues for a longer period, the impact will intensify.
The country is feeling the impact through a reduction in exports and a rise in import bills. Being an oil-importing country, Bangladesh is already feeling the pressure through high import payments, the report cautioned.