According to Joseph E. Stiglitz, Nobel laureate in Economics, "The most distinctive aspect of 2017 would be uncertainty, fuelled by, among other things, Donald Trumph's election as the president of the United States and the United Kingdom's vote to leave the European Union. The only certainty, it seemed, was uncertainty - and that future could become a very messy place". Understandably, Stiglitz related his observations to the future realities of the world at large but we could possibly apply those for Bangladesh too.
By any stretch of imagination, the year 2017 was the worst-ever since 2009, the year the Awami League returned to power. Nearly a decade passed off peacefully without any vengeance from the nature. The economic growth rate hovered around 7.0 per cent plus for the last couple of years; social indicators showed a positive trend and income poverty dropped drastically. Suddenly, however, all seemed to have fallen flat in 2017. There was hardly any good news in trade and business. Doing business has turned out to be tougher. The Global Financial Integrity (GFI) reported that about Tk. 730 billion have been laundered. Bangladesh has become 15th most corrupt country in the world. Good governance indicators could show no remarkable improvement in 2017. The puzzle was that despite such odds, the economic growth rate kept picking up.
However, the year 2017 was politically calm. In fact, the year may go down in our history as an unusual year of political calm in a country of confrontational politics. There was no hartal or 'oborodh' to make citizens' lives miserable and trade and business unbearable. All were silent on the political front in the absence of a strong opposition in and outside the parliament.
The outgoing year, 2017 could be rated as an adverse year on another count. There were two consecutive floods: first flash flood in haors and second flood spread over many districts. Together, they dealt a heavy blow to the economy. With the country almost on the brink of self-sufficiency in food grains output, requiring less imports of food from outside, the floods led to a loss of crops thus putting a huge burden on the economy. Loss of livestock, infrastructure and other assets was no less unbearable. The natural disaster produced a spike in the general price level. The inflation that went up during the last leg of the outgoing year 2017 is likely to edge upwards in 2018, mainly fuelled by food price rise. Inflation rose to 6.0 per cent in October 2017 from 5.0 per cent in December 2016. Economists are of the view that unless inflation is tamed, serious ramifications could emerge. According to them, inflation below 5.0 per cent tends to make lives of the low-income group tolerable and to keep the economy competitive at global level.
Impact of inflation needs no elaboration. Besides making things uncertain, it also bites common people. A research done by the South Asian Network on Economic Modelling (SANEM) showed that some 5.2 million people have fallen into poverty due only to a rise in rice prices in 2017. The retail price of a kg of coarse rice rose to Tk. 47.78 in September 2017 from Tk.35.84 in January the same year due to crop damage from recent floods and depleted public stocks. Professor Selim Raihan of Dhaka University opines that there is likely to be a rise in head count poverty rate by 0.32 percentage points due to rise in prices in 2017.This bad news is likely to continue in 2018 as domestic or world market for rice may not stand up to the mark. It is perhaps time Bangladesh came up with a 'rice policy' comprising issues of production, marketing, food management, world trends, etc., to avoid future problems.
In 2017, Bangladesh continued to witness scams in commercial banks and rising loan defaults. A few banks created, mainly from political considerations at the cost of business, are allegedly facing red signals; the old scams emerging in new shapes are making the financial sector most vulnerable. Toxic loans and recapitalisation and health of the state-owned and a few private banks were talk of the year. Will the situation improve in 2018?
The year 2017 suddenly saw the influx of Rohingyas from Myanmar. By now about 7,00,000-8,00,000 Rohingyas have occupied landscape in Ukhia and Teknaf. Bangladesh has shown the sagacity of giving shelter to them on humanitarian ground but the adverse impacts of their stay on agriculture, forestry, transport, labour market, prices of commodities in and around Cox's Bazar need no mention.
Any good prospect for 2018? Possibly there are a few. First, remittance inflow may rise as Gulf economies that absorb most of our migrants have rebounded. Remittances from the US and the UK have already been showing an upward trend. Second, exports in the last leg of 2017 rebounded from a sluggish growth for almost a year mostly due to depreciation of Taka in recent months. Third, import growth at higher rate presumably speaks of a turnaround in industrial performance.
However, all these bright spots might turn dark in the face of political instability looming large in the run-up to a general election.
The writer is a former Professor of Economics at
Jahangirnagar University.
abdul.bayes@brac.net