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Russian-Ukraine Crisis Contributes to Reduced National Exports
The ongoing war between Russia and Ukraine has caused recessions globally. As a consequence of inflation and reduced demand, Bangladesh's earnings from exports have declined. Eventually, the foreign reserves in the central bank have also been reduced, causing the government to think about lowering imports to store foreign reserves for stability in future imports. On the other hand, the government might also face a shortage of funds while making payments for ongoing projects done by foreign investors. The government might also increase interest rates to stop further reductions in the reserves.
https://www.dhakatribune.com/economy/2022/10/02/september-exports-dip-625-to-39bn
National Stock Exchange Market End On High
The Dhaka Stock Exchange ended the first week of October on a high note, having recovered 56.6 points in its benchmark index, while subsidiaries of Orion Group topped the gainers' list and secured the highest turnover all throughout. The central bank raised the repo rate by 25 basis points to 5.75% to curb inflation, which soared to a decade-high 9.8% in August. In addition, export earnings and remittances declined by 6.25% and 11% year-on-year in September, respectively, which widened the trade deficit and put pressure on the country's foreign exchange reserves. These developments created a negative sentiment among investors. However, the index rose due to the big jumps in a few companies.
https://www.thedailystar.net/business/economy/stock/news/stocks-end-week-high-note-3136916
Price surge eating up the buyability of Taka.
Inflation in Bangladesh has hit the highest mark in the last 12 years in the month of August. The numbers say it was 9.5% in that month. And in the following month also, it hit a mark of 9.1%, as reported by the Bangladesh Bureau of Statistics. The supply chains had been on a block since the war started, which resulted in a price hike. And the biggest cost of this inflation is the erosion of the real income of consumers. It is definitely visible that the Bangladeshi currency is buying less than ever in its history. What’s coming up next?
https://www.daily-sun.com/post/648584/Inflation-in-Bangladesh:-9.5-in-Aug-highest-in-12-years
Bangladesh Expects Loans from the World Bank to Stabilize Economy
Bangladesh has officially proposed to be facilitated with loans from the World Bank’s(WB) wing International Development Agency (IDA)-20, expecting a total of $7.15 billion, where $6.15 billion has been planned to work out 54 projects and $1 billion was wanted to support the budget. But the ongoing crisis in the lender’s country demands uncertainty to have the loans sanctioned. In the 2021–2022 fiscal year, Bangladesh received $1.67 billion out of IDA’s promised $2.16 billion. Owing to the current foreign currency crisis, Bangladesh could experience unemployment, lower output, and hyperinflation in the long run. Consequently, foreign loans can be of help to attract investments that can balance the foreign exchange rate.
https://www.daily-sun.com/post/648675/Govt-seeks-6.15bn-loans-from-WB
Funding gaps due to COVID -19 pandemic and Ukraine-Russia war it is making it difficult for Bangladesh to achieve SDGs:
Bangladesh is facing an economic downturn due to the COVID-19 pandemic and the Ukraine-Russia war. Only 3% of the required SDG amount is being met. OECD countries are pledged to provide 0.7 percent of their gross national income for the poor countries, but it is only 0.2 percent due to investment gaps. Infrastructure and supply chains are being affected, leading to a decline in economic growth. Unless developing countries meet the financial gaps and ensure technology transfer, it might be really difficult for Bangladesh to achieve SDGs and ensure economic growth. In order to overcome the challenges, it is crucial for the global community to revisit the ways in which to achieve the SDGs in the changed global context.
A bad month for the economy alongside a 13-month low in exports
September 22’ hasn’t been good to the nation. We saw a record fall in export and remittance, the two foundations of our macroeconomic approach. Despite July-Sept being a good session for us in export where we saw a raise of 13.38%, in September the export fell to a record 14-month low of 6.25% and remittance fell to a record 7-month low of 11%. A slight relief was seen in the import sector where we saw a drop to 6% from 6.1%. But what are the causes? The world is facing one of its worst inflations, alongside highest exchange rates. The importers are hesitating to bring their money to the table. Our biggest trade bloc, the EU, and the US experienced inflation and a raise in average consumer prices in August. So, they are cutting garment orders and declining already prepared products.
https://www.thedailystar.net/business/economy/news/september-brings-no-cheer-economy-3133636
https://www.thedailystar.net/business/news/why-did-exports-fall-first-time-13-months-3135791
A Drop in Foreign Reserve by 20 Million Within a 24-hour Timeline
Due to excessive import payments and declining export earnings, Bangladesh's foreign exchange reserves fell below $37 billion on September 21. Bangladesh Bank reserves were $36.98 billion, down from $37 billion the day before. In September last year, the country's reserves were $46,19 billion. The central bank sold $70 million in reserves to clear import bills. Imports rose 23.2% from the previous year to $5.86 billion in July. The export-import imbalance has caused the central bank to inject $3 billion into the market this fiscal year, down from $7.62 billion last fiscal year. This trend is feared to continue with inflation and higher fuel prices.
https://www.dhakatribune.com/economy/2022/09/22/forex-reserves-dip-below-37bn
A 24-year-high price surge in Turkey
Inflation in Turkey has reached a 24-year high with the inflation rate exceeding 83%. The transportation, housing, and food sectors have seen the highest surge in prices, contributing strongly to the hyperinflation the Turkish economy now faces. Even though the drastic rise in prices in the country has largely been due to the rising food and energy prices on the global front, unorthodox government policies have also exacerbated the problem. Rising inflation is often fought with higher interest rates to encourage savings and discourage consumption, which can reduce demand for goods in the economy. However, falling interest rates have caused the opposite to happen in Turkey, further aggravating inflation in the economy.
https://www.bbc.com/news/world-europe-63120478
Germany sees a boom in exports
After witnessing a plunge in exports by 2.1% in July, Germany managed to trigger the figure by 1.6% in August by exporting commodities worth almost €133.1 billion despite of low demand from European countries, Germany successfully attained this as demand in the USA for domestic goods amplified. However, higher global prices and a weaker euro pushed up the cost of German imports in August, which rose by 3.4% to €131.9 billion, narrowing the country's trade surplus to €1.2 billion. Simultaneously, Germany is still struggling to fight against increasing inflation and rising fuel prices. ING bank economist Carsten Brzeski stated, "The war in Ukraine has succeeded in delivering what nothing else had managed before: letting the notorious German trade surplus disappear."
https://www.thedailystar.net/business/global-economy/news/german-exports-rebound-3136086
8 Year high inflation recorded in Japan
Japan's inflation quickened to 2.8% in August to hit the fastest annual pace in nearly 8 years due to higher raw material costs and a weaker yen. While inflation has exceeded the central bank's 2% target for a straight 5 months, the Bank of Japan is unlikely to raise interest rates any time soon as wages and consumption growth remain weak. The BOJ faces a dilemma as it tries to underpin a fragile economy by maintaining ultra-low interest rates, which in turn are fueling an unwelcome slide in the yen that is driving up households' cost of living. Japan's food prices are expected to surge in 2022 as imports are still climbing.
Monetary tightening to stunt job growth in the US
The US employment rate increased by 0.2% in September 2022, creating 263,000 new jobs. Substantial hiring of workers came from the hospitality, leisure, and healthcare sectors despite fears of an economic slowdown. The slow yet resilient growth of the job market might influence the Federal Reserve to increase interest rates in order to tame aggressive inflation, leading to an expected fall in spending on cars and houses. As monetary tightening is often linked to a decline in economic activity, employers may lay off more workers in the future to cut costs, which is already happening in the housing and tech sectors, with Peloton, an American exercise equipment and media company, shedding 12% of its workforce.
https://www.bbc.com/news/business-63175023
IMF criticizes the chancellor's mini-budget
The International Monetary Fund condemned the decision on a huge tax cut by the UK government. It may result in increased inequality and higher prices. Although it acknowledged that the government’s mini-budget would boost growth, the tax cuts would still aggravate the price rises, which the Bank of England is trying to bring down. It also cautioned that the government would need to protect the least well-off from the impact of higher prices. The economic outlook showed that government borrowing costs remained close to the levels seen at the height of the market turmoil last month, despite fresh actions from the Bank of England to try and stabilize financial markets.
https://www.bbc.com/news/business-63206733
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