Indications are there that consumers have returned to their spending habits that dropped to bare necessities.
Credit card transactions have increased. Deposit patterns have also changed, showing a definitive consumption pattern.
The transaction volume of credit cards crossed the pre-pandemic level, reaching a monthly value of over Tk1,500 crore in December last year.
Arifur Rahman, head of the Card Division at the City Bank, said it is a good sign that people are moving out as restrictions on movement have been eased.
Consumers are spending money through credit cards for visiting restaurants and travelling to local tourist destinations, he mentioned.
"However, the new wave of the coronavirus is worrisome and we cannot say how long this behaviour will sustain," he further said.
The transaction trend in e-commerce also reflects the rise of consumer spending as the pandemic pushed customers to online shopping.
The transaction value in e-commerce platforms also more than doubled from the pre-pandemic level, recording Tk600 crore in December last year, according to the Bangladesh Bank.
The return of consumers' spending habit to the normal level put the brakes on pandemic savings in January this year. Savings have been swelling since the virus hit the country in March last year as people shied away from consumption.
Demand deposits with banks, which show disposable income, declined by Tk6,000 crore in January after reaching a record high of Tk1,48,172 crore in December last year.
However, the year-on-year growth of demand deposits – money deposited in bank accounts with funds that depositors may withdraw on-demand at any time – climbed a record high of 25.47% in January, according to Bangladesh Bank data.
Even though demand deposits fell by 4% in January from the previous month, time deposits showed the opposite trend reflecting that earnings of low-income people, who were spending their savings amid job cuts and income losses during pandemic, have returned to normal.
Term deposits – accounts in which depositors save money for a predetermined period ranging from a few months to several years – grew by Tk1,800 crore in a month in January this year from December last year, central bank data show.
The decline in savings has also slowed down the rising trend of excess liquidity. The total excess liquidity in the banking sector remained steady at Tk2 trillion in January, which was the same in December last year.
This is a common nature that people save more during uncertainty which was reflected in the rise of demand deposits amid the pandemic crisis, said Md Arfan Ali, president and managing director of Bank Asia.
Consumers' behaviour has changed with the normalisation of the situation and they have started to spend more, he observed.
Increasing crowds in tourist destinations reflect how consumers are in a spending spree now, he continued, adding the demand for consumer loans in banks is also on the rise.
"There has been a change in consumers' product priorities. We see a notable increase in the demand for products that are more related to consumers' health and hygiene. Besides, the demand for IT products such as laptops has increased significantly," said Raziur Rahman, senior manager (Marketing Communication) at SINGER Bangladesh Limited.
Mohammad Helal Uddin, president of the Bangladesh Shop Owners Association, told The Business Standard that shopping is yet to return to the pre pre-pandemic level as majority of people are acting conservative while making purchase decisions.
One who used to buy two units of a product still is trying to limit it within one or deferring the purchase if not a must right now, he said, adding that household income for most of the families across Bangladesh suffered a dent in 2020 and is yet to heal completely.
"However, as the vaccine is here, the economy is doing much better than expected. In the coming Ramadan and Eid, shopping will take off," he said, expressing his optimism about going back to the pre-pandemic level.
The rise in consumer demands is also reflected in inflation data, as rising consumptions have pushed up the prices of consumer goods.
The inflation rate on a point-to-point basis rose to 5.32% in February from 5.02% in January this year on the back of surging food and non-food prices.
The Bangladesh Bank in its recent monetary policy review warned of inflationary pressure in the coming days.
It said the global inflation may rise in the near future, as a result of which Bangladesh might face a little pressure in the near future.
The country's imports that were depressed in the last one year saw a notable increase in January this year from the previous month, backed by rising consumptions in the local market.
Import costs in the first six months (July-December) of this fiscal year were $25.23 billion, while it rose to $31.92 billion by the end of January. In other words, January alone saw a $6.69 billion rise in import costs.
Imports of consumer goods saw a significant rise of 3.51% year-on-year in the first six months of current fiscal and the rise was mostly in one month in January.
A recent survey by South Asian Network on Economic Modelling (Sanem) found strong business recovery in the January-March quarter, which also justifies the rise in consumer spending.
About 16% of entrepreneurs are confident about a strong recovery in the January-March period of the current fiscal year, which was only 4% in October-December, says the survey.
Moreover, about 15% of entrepreneurs are anticipating a weak recovery in this quarter, which was 26% in the last quarter, it adds.
The global economy also expects a consumer-led boom as consumers in the rich world are sitting on piles of pandemic savings.
The Economist, a London based newspaper, has gathered data on personal savings – the difference between post-tax income and consumer spending – for 21 rich countries. It has found that households saved $6trn in the first nine months of 2020.
Households in some places have built up bigger cash piles than those in others, says Economist.
In America, excess savings may soon exceed 10% of the country's GDP, in part because of President Joe Biden's $1.9trn stimulus plan.
Meanwhile, research by JPMorgan Chase, a bank, suggests that in many rich countries consumption will soon rebound to near its pre-pandemic level, powering a strong global recovery.
Goldman Sachs, another bank, reckons that in America the spending of excess savings will add two percentage points to GDP growth in the year after full reopening. That points to a fairly rapid recovery in both output and employment.
On 9 March, the Organisation for Economic Co-operation and Development or OECD, a rich-country think-tank, upgraded its forecast for GDP growth for the G20 group of countries to 6.2% in 2021, arguing that household savings represented "pent-up demand".