Bangladesh is significantly prone to many of the recessionary risks if appropriate steps are not taken to diversify the export products and basket and increase remittances through the formal channels although the country may not go into recession.
The International Chamber of Commerce-Bangladesh (ICCB) in its latest editorial today also highlighted the importance of taking appropriate measures to streamline public sector expenditures, rationalise mega infrastructure and other projects and undertake effective financial sector reforms. The global economy surpassed US$100 trillion for the first time in 2022, but is likely to stall in 2023 due to last year's multifaceted shocks and challenges.
The three main global growth engines -- the US, Europe and China-- will experience slower growth in 2023, according to the editorial.
In Bangladesh, according to experts, a major effort should be directed toward strengthening macro-prudential regulations and building foreign exchange reserves.
Fiscal measures should carefully regulate the withdrawal of financial support measures while ensuring consistency with monetary policy objectives.
A credible medium-term fiscal plan should be in place, among others, to provide targeted relief to vulnerable households.
The supply-side measures should aim to ease labour-market constraints, increase labour-force participation, reallocation of displaced workers and reduce price pressures.
Effective policy coordination will be important in increasing the food and energy supply. For the energy sector, policies should accelerate the transition to low-carbon energy sources and introduce measures to reduce energy consumption to face climate change, according to the editorial of the ICCB.
Higher-than-expected and persistent inflation tightened financial conditions, Russia's war against Ukraine, the lingering COVID-19 pandemic and supply-demand mismatches have further slowed the global economic outlook.
Russia's conflict with Ukraine not only threatens the lives of millions of Ukrainians but has also accelerated a series of cascading and interconnected global crises in food, fuel, and energy, resulting in rising costs of living further adding inflationary pressure in many countries.
In addition, extreme weather conditions due to climate change pose downside risks to the global economic outlook, and increasing energy prices also hamper the path toward a green transition, said the ICCB.
The persisting global challenges have caused rising debt vulnerabilities and hampered the way toward recovery, which further impacted vulnerable groups, especially low-income and developing countries.
