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Loan Payment Claimed by Russia in Ruble
From 2015 to 2016, Bangladesh confirmed $11.87131 billion in loans for the construction of Rooppur’s 2400 MW Nuclear Power Plant in Pabna. The loan repayment to Russia is on a half-yearly basis, of which Bangladesh has not paid for July-December 2021 and January-June 2022 installments. This is due to the sanctions that were imposed by the US and the EU following Russia’s war against Ukraine. To bypass the sanctions, Russia has requested Bangladesh that they make the rest of their repayments in the Russian currency, Ruble. Russia is taking their sanction payment in their currency to make the ruble strong against other currencies to eventually gain world domination.
https://www.dhakatribune.com/economy/2022/09/27/russia-repay-rooppur-plant-loans-in-rubl
New budget, New solution
The country braces for an economic slowdown due to rising interest rates, inflation, and disastrous floods. Rising interest rates will restrict investment levels as the cost of borrowing increases. Rather, people would choose to save more due to a higher return, and hence output levels would fall. However, the new budget by the labor government forecasts economic growth and lowers budget deficits by half or more. This would increase government reserves and help pay off foreign loans if the economy has any. This new budget would help families cope with higher costs, which they believe will lead to higher labor productivity and thus increase the potential growth of the economy.
https://apnews.com/article/inflation-australia-business-economy-d7bc2eec92c06c48f21f294e6da61a0b
NEW BAD RECORDS IN THE UK? IS THE UK DOING WELL?
Until a few months ago when everyone was talking of increasing inflation, now the recession is the new hot potato globally. The UK, predicting a high recessionary period ahead, has raised its interest rates to 1.75%, the highest in 3 decades. The Bank of England, which suffered a blow due to 42 years of highest inflation of over 13% due to Russia’s invasion of the Ukraine war, is also suffering from the lowest level of output due to the global financial crisis. Higher interest rates make it more expensive for people to borrow money and encourage people to save. Overall, that means people will tend to spend less which tends to raise prices more slowly lowering the rate of inflation. The IMF said that the UK economy is likely to expand just 0.5% next year, the slowest growth rate among the world’s advanced economies.
ASIA-PACIFIC TO DOMINATE GLOBAL GROWTH IN 2023
Economies in the Asia-Pacific region are expected to grow on average by 3.5% in 2023 when the global real GDP grows by only 1.4%. The resilient growth in Asia-Pacific has come from lower regional trade barriers and efficient supply chains which have kept their exports price competitive. However, China will not enjoy similar growth as its neighbors because restrictive Covid-policies have hampered its economy. The West is likely to face a recession due to its efforts to control price hikes. Speculation says, falling export demand from the west might hurt export-oriented economies in the Asia-Pacific region, limiting their growth. But rising domestic demand due to the re-opening of these economies as a result of mass vaccination might outweigh such effects.
https://www.cnbc.com/2022/10/27/asia-pacific-will-lead-global-economic-growth-in-2023-sp-says.html
Dollar crisis and its impact on the Pharmaceuticals of Bangladesh, an opportunity for other industries to get alarmed.
The dollar crisis has harmed the pharmaceutical industry of Bangladesh. Within a span of 6 months, more than half of the pharmaceutical firms have experienced a decrease in profits, with BEXIMCO Pharmaceuticals observing a 33% drop in earnings. Rising freight expenses besides the depreciation of the Taka have contributed to this problem. Thanks to the dependence on the global market for ingredients, production costs have increased by nearly 25%. Many companies are now taking measures to adapt and have started adjusting prices accordingly, which may harm consumers amid ongoing inflation. Yet, falling profits may hinder investment in the long run which needs to be avoided since this industry is growing rapidly, even stepping into global markets.
Source:
https://www.thedailystar.net/business/economy/news/profit-falls-most-listed-pharmas-3166296
IMF calls for clarity on Capacity Payment and Power Subsidies
On November 2, 2022, IMF had two separate meetings with Independent Power Producers and Bangladesh Power Development Board (BPDB), also asking the government how they would deal with stopping the already exceeding Tk 26,500 crore capacity payments in FY22. The BPDB refused to take loans from commercial banks instead of taking subsidies from the government as they did not want to keep up with interest against the loans when asked by the IMF. They also asked about the efforts by the government to expand the scope of renewable energy expansion. A portion of the loan that Bangladesh is seeking from the IMF is contingent on sustainable energy development.
Bangladesh to Get Favored from Vietnamese Market
Bangladesh and Vietnam will be stepping on their 50 years of diplomatic relations in 2023. On this note, the Vietnamese ambassador in Bangladesh expressed the wish of the two countries about celebrating the golden jubilee reaching a mark of $2 billion of bilateral trade between them. Currently, the trade exchange accounts for $1.1 billion which is expected to reach $1.5 billion by the end of December. The Vietnamese ambassador was positive about Bangladeshi products being demanded more in the Vietnamese market which is a great sign for Bangladesh. Moreover, he specially mentioned the hike in demand for Bangladeshi pharmaceutical products in Vietnam. This can be a vital factor for Bangladesh in boosting her reserve and in facing the upcoming recession predicted by the economists.
Bangladesh’s International Business At Stake
Exports from Bangladesh performed low by 7.85 percent in October compared to the previous year, falling short of the objective by nearly 2.9 percent where Bangladesh experienced a boost there previously. In fact, in the first four months of the fiscal year, exports grew to $16.85 billion. But experiencing disaster in September and October resulted in a 3.25 percent decline from the target. Moreover, Bangladesh set a goal of $58 billion in exports for the current fiscal year but Garment industrialists see no hope of that due to the current economic crisis in the west. Gains from October gave us a rise in exports but fell short of the target by 0.75 percent. The war between Ukraine and Russia created unrest in the international market which can show us a decrease in GDP. Also, changes are imminent in the price level, consumption, and savings. As Bangladesh is dependent on limited export industries such as the RMG so the shortcomings in the export industry will eventually impact the unemployment level and the purchasing power of Bangladeshi people which may lead to stagflation in the near future.
https://bdnews24.com/business/cia964ggn3
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