The political crisis in Bangladesh is also going to affect the economy. America’s prestigious rating agency Moody’s has warned in a recent report that Bangladesh’s economy could slide back into the era of the Corona epidemic. Moody’s has expressed apprehension that the curfew imposed in Bangladesh will cause serious damage to the country’s economy.
What does Moody’s report say about Bangladesh?
Moody’s report says that even before the current conflict in Bangla began, it was facing many challenges on the economic front. Such as sluggish global demand and tough competition. Now the current violence has also increased the risk of closure of these businesses. This is a big challenge for Bangladesh’s economic growth. If it is not dealt with soon, the economic situation can worsen significantly.
The curfew in Bangladesh is economically reminiscent of the lockdown during the Corona epidemic. If the situation in Bangladesh does not calm down and businesses are forced to remain closed for a long time, we fear a significant drop in exports. In this situation, the problems for Bangladesh’s GDP growth will increase significantly.
GDP growth forecast also reduced in reports
Moody’s had earlier predicted that Bangladesh’s GDP growth would be 5.4 percent in 2024. But, now it has been reduced to 5.1 percent. Moody’s report said, ‘We have reduced Bangladesh’s GDP growth forecast from 5.4 percent to 5.1 percent for now. This is a provisional figure, which depends on the duration and severity of political, social and economic turmoil.’
Will companies exit Bangladesh?
According to Moody’s report, due to the current violence and curfew, many companies may reconsider continuing their business in Bangla. Some businesses have already sent their orders to other countries so that there is no problem on the supply front. The report said that this could potentially be a sign of Bangladesh’s economic collapse, as rising oil prices have also increased Bangladesh’s import cost significantly and affected the trade balance.
How Bangladesh’s economy was better than India
Bangladesh‘s social indicators were better than India in many respects. Despite this, it failed to diversify its economy. These include low fertility, higher life expectancy, high female workforce participation and strong women’s empowerment. All these have provided the basis for Bangladesh’s miraculous economic rise. Once seen as a tough state, Bangla created a world-class readymade garment (RMG) industry. It now exports more than India. It has managed to maintain the country’s almost miraculous growth rate of 6.5 percent per year since 2000.
India can get this benefit
The current political instability in Bangla Desh may harm India in the long run, because the situation will not be normal even in the most trusted neighbourhood. But India can benefit from it in the short term at the business level. India also has a good presence in the garment industry. India is the 6th largest apparel exporter in the world.
India has invested 70 thousand crores
India has invested about 70 thousand crores in various development projects of Bangla Desh. It is obvious that the problem that has come with it can also affect this investment of the country. India has invested money in many infrastructure projects including building roads, railways, and shipping yards. According to an estimate, India has invested money in about 93 projects in Bangladesh.
Impact on trade with India
India and Bangladesh not only share a 4,092 km border, but both countries are also very close in terms of trade. Obviously, any stability in Bangladesh can also affect India’s border security. It is also likely to affect bilateral trade and the supply chain. India is Bangladesh’s second-largest partner in Asia. In the financial year 2023-24, Bangladesh sent goods worth about 17 thousand crores to India, while the total trade between the two countries was $ 14 billion (Rs 1.16 lakh crore).
Per capita income in Bangladesh is $ 2600
Bangladesh’s per capita income is $ 2600, which is equal to India’s. But the miraculous story of its economic rise is now on the verge of collapse. It has sought assistance from the IMF to handle the situation and its inflation is 9.4 percent. Readymade garments (RMG) employ 4 million women directly and 4 million indirectly. Huge factories employ more than 10,000 people each. Many economists have urged India to follow Bangladesh’s labour policies such as easy recruitment, dismissal, and flexible timings.
Foreign investment was increasing
You know that Bangla is mostly dependent on foreign economy and foreign investment also increased here. Global rating agencies gave good ratings to this country due to which the confidence of investors increased and multinational companies from many countries including Europe set up their manufacturing here. Recently, Bangladesh’s economy has also crossed the figure of 455 billion dollars. Bangladesh exports clothes worth 5 billion dollars to America and 12.5 billion dollars to Europe every year.
What will be the loss now?
Due to the protests going on in Bangla Desh for about 2 weeks, a loss of more than Rs 1 lakh crore has been incurred so far. Currently, the army has taken over the country and declared a 3-day shutdown. Due to this, import-export has come to a complete halt and all ports have been closed. Freight and transport services have also come to a standstill, which can increase the country’s losses by two to three times in the coming 3 days.
It will affect investors
Foreign investors have invested a lot of money in the country and due to this protest and shutdown, they may have to suffer a big loss. Obviously, this will also affect the intentions of foreign investors and due to the army being in control, the country’s policy can once again go into a phase of uncertainty. This will have a direct impact on the country’s domestic and foreign investment, due to which the pace of the economy will also definitely slow down.
Big impact on business
Due to the unstable environment, shutdown, and protests, the country’s economic activities have also been badly affected. It will have a direct impact on the manufacturing of local companies. Obviously, this will reduce production and if the market demand is not met, then inflation will also definitely increase, the brunt of which will ultimately be borne by the common man. Units of many companies producing clothes in Bangla Desh. If this gets affected then the prices of branded clothes imported from abroad may also rise.
