Fighting the great recession

Jyoti Rahman

Published in the Daily Star, 18 May 2009.

NO country has been immune from what is being dubbed as the Great Recession — the sharpest synchronised global slump since the Great Depression. Bangladesh is no exception. Compared to the average economic growth of 6.3% recorded in the past five years, the growth estimate for the current financial year is 5.9%, and it may dip to less than 4.5% next year according to a range of forecasters. This growth slowdown will undoubtedly have flow-on effects on employment and poverty alleviation.

To combat this, the government announced a Tk. 34 billion package on April 19. Interestingly, only about an eighth of the package is geared towards exports. More interestingly, the readymade garments (RMG) sector — the country’s largest export earner — received nothing. The bulk of the package is for agriculture, power generation, and social safety (such as food relief) programs.

How should we think about the package?

Public-private partnership budget

Syeed Ahamed

Published in the Daily Star on 18 May 2009.

THERE have been some strong media speculations that the coming budget will introduce Public Private Partnership (PPP) to Bangladesh. This will have lasting implications for our development.

Food Prices and Food Security

Jyoti Rahman

Published in the Forum on February 2009

“We will have to … reduce price hike and improve people’s living standard,” said the prime minister at her first news conference after the landslide election victory. Since then, she and her senior ministers have repeatedly stressed that bringing down the prices of essentials within people’s purchasing power is a priority task for the government. This is not surprising given the importance most voters accorded to high prices in the lead up to the election.¹

The Awami League capitalised on voters’ concerns by pointing to its better record on this issue. Prices of essentials — the proverbial rice, lentil, cooking oil and salt — either remained virtually unchanged or fell between 1996 and 2001, while all prices rose under its rival (Chart 1). To put the price rises in context, a male farm labourer earned an average daily wage of 48 taka in 1996 (with which he could buy 3.1 kg of rice), 67 taka in 2001 (buying 4.3 kg of rice) and 95 taka in 2006 (buying 3.7 kg of rice).

On syndicates

What’s In Store for a New Government?

Jyoti Rahman

Published in the Forum on december 2008

The IMF usually publishes forecasts for the world economy twice a year. After its April release, I discussed how the economic slowdown triggered by the global financial crisis would affect Bangladesh. What was expected to be a slowdown in April is now being feared as the worst global recession since the Great Depression. How will the recession affect Bangladesh? What policy options will the new government have?

It is difficult to answer these questions, particularly given the uncertainty surrounding the world economy. The IMF significantly revised its October forecasts downward within a month of publication, the unusual step underscoring how quickly the events have been unfolding. Similarly, over the past couple of months, almost every day has seen some key forecaster downgrading their numbers.

How Will the Global Economic Slowdown Effect Bangladesh?

Jyoti Rahman

Published in the Forum (May 2008 )

These are difficult times for the global economy. Economic growth is weakening around the world, reflecting the fallout from the sub-prime mortgage crisis and associated financial market turbulence. A recession appears to be imminent in the United States — the question now is about its severity and length. Other developed economies are also expected to slow. As are, to a lesser extent, major emerging economies in Asia. And the slowdown is happening in a period of significant inflationary pressure, complicating the job of macroeconomic policymakers.

What has caused the slowdown? What is the global economic outlook? What is the outlook for Bangladesh? If the global slowdown is much more protracted than the current forecasts, what would be the impacts on Bangladesh?

Of food and fuel

Jyoti Rahman

Published in the Forum (Feb 2008)

Politically, Bangladesh stands at a cross-road in 2008, with credible elections and sustained democracy being a realistically attainable choice. Yet, it is an economic issue that can overshadow all socio-political developments. Rising food price inflation — agflation — is arguably the greatest problem facing the country today. And while there are domestic factors at play, the global nature of agflation makes it difficult for the policymakers to stem its rise.

Although agflation started picking up in 2003, it has gathered pace in the past few months (Chart 1). Food prices rose by 11.7 per cent during the 12 months to October 2007, to be over 50 per cent higher than their 2002 levels.

There are many reasons for high and rising agflation.

On agflation

Jyoti Rahman

Published in the Forum (November 2007)

Rising food price inflation is a major, perhaps the most important, economic issue facing the country. But it’s not only in Bangladesh where food prices are rising. It’s a global phenomenon that the Economist has dubbed agflation.¹ There are macro and microeconomic reasons behind agflation, and policies to combat it will have to take these factors into account.

Let’s start with the global reasons. There are three reasons behind the global agflation. First, concerns about the effects of climate change have resulted in a rapid rise in the demand for bio-fuel whose production relies on corn. This has led to rises in the price of corn and its substitutes like wheat and other grains. Second, rapidly rising prosperity in poorer countries, particularly India and China, are raising global demand for food products, and are thus fuelling price rises.

Let’s go to the videotape

Jyoti Rahman

Published in the Forum (September 2007)

In its recently-released annual economic report for Bangladesh, the IMF notes that “the destructive political rivalry of the past three decades, together with weak accountability and rule of law, has squandered a good portion of available resources” and “Bangladesh needs political stability to restore investor confidence.” As general principles, one cannot argue with these statements. But quite often, these sentiments morph into a denouncement of political governments and an endorsement of prolonged rule by unelected technocratic regimes.

The argument that “democracy is not conducive to economic development” and “a period of disciplined rule is needed” has been doing the rounds among the chattering classes for a while now

The third pillar

Amer Ahmed

Published in the Forum (August  2007)

The article considers what steps we can take to ease the lot of the migrants who are so crucial to the economy

With the World Bank recently describing migration as the third pillar of globalisation, alongside trade and capital flows, it is no surprise that policy discussions on migration and its impacts are gaining importance in Bangladesh. From a few thousand in the 1970s, the number of Bangladeshi migrants has exploded to a gross figure of more than three million by 2002, with about $23.7 billion being sent back in remittances over that period (Kibria, 2004).

As of 2006, expatriate workers’ remittance flows were four times greater than Official Development Assistance (ODA) and eight times more than Foreign Direct Investment (FDI). The importance of the migrant workers and their role in the development of Bangladesh is not lost on policy-makers