Slow public expenditure, rise in inflation, decline in foreign exchange reserves, unemployment situation and low investment pose challenges in the way of economic recovery, according to quarterly review of economic situation of the MCCI.
The review, released on Tuesday, however mentioned that to overcome the challenges, the government took quick and decisive measures to address the economic fallout.
The government also needs to take more actions to stable foreign exchange reserve, manage inflation, enhance revenue earnings, ensure proper electricity and gas supply for economic activities, and extend social safety net programs.
Nevertheless, the economy has been showing some signs of improvement in the quarter under review (Q4 of FY23).
Exports and imports are two important drivers of the economy, and amid the present situation, both the areas have done comparatively well, the report said, mentioning that foreign currency reserve is still somewhat in a satisfactory position but into a weaker trajectory.
NBR’s tax revenue collection grew by 9.89 per cent to Tk.3,314.55 billion in the just concluded fiscal year (FY23) compared to Tk.3,016.34 billion in FY22 despite posting a shortfall of Tk.385.45 billion or 10.42 per cent against the target (Tk.3,700.00 billion).
During July-June of FY23, all three wings of the NBR year-on-year achieved moderate growth. However, compared to their respective targets for July-June of FY23, all three wings of the NBR are lagged behind their respective targets.
The implementation rate of the Annual Development Programme (ADP) in FY23 stood at 84.16 per cent, 8.58 percentage points lower than the previous years’ 92.74 per cent.
According to the IMED, the government ministries and agencies had failed to improve their capacity even after repeated reminders to them for expediting the development works and even after recovery from the COVID-19 impact when the project works were affected severely.
Export earnings (Goods) in FY23 increased by 6.67 per cent to US$55.56 billion from US$52.08 billion in the previous fiscal year riding on a double-digit growth of readymade garments (RMG).
Overall export earnings in FY23, however, were lower by 4.21 per cent against the target (US$58.00 billion) amid lukewarm global demand, economic turmoil, geopolitical crisis, and inflationary pressures.
On the other hand, export earnings in June 2023, the last month of the fiscal, grew by 2.51 per cent to US$5.03 billion from US$4.91 billion in the same month of 2022. Export earnings in June 2023, however, were lower by 9.61 per cent from the strategic target of US$5.57 billion.
The net foreign direct investment (FDI) in the just concluded fiscal year (FY23) decreased by 11.82 per cent to US$1,611 million from US$1,827 million in the previous fiscal year (FY22), according to the BB’s balance of payments data.
According to the Bangladesh Bank’s (BB) latest data, the country's current account balance recorded a lower deficit of US$3.33 billion during July-June of FY23 compared to US$18.64 billion deficit during the corresponding period of the previous fiscal year, mostly due to narrowing of trade deficit.
Trade deficit with the rest of the world narrowed by 48.41 per cent to US$17.16 billion in FY23 from US$33.25 billion in FY22 due mainly import spending dropped by 15.76 per cent against export receipts increased by 6.28 per cent in FY23 (Table 11).
