Dhaka, Bangladesh
Adapting to corona-created economic norms vital task

Adapting to corona-created economic norms vital task

Remittance records surprise rise, export ebbs down

News Report: Expatriate Bangladeshis have remitted 16.36 billion US dollars in 11 months of the outgoing fiscal year, almost equalling the remittances in the whole of FY 2018-19, though it's not the whole story of economic health. The other cash cow for the country's foreign-exchange reserves--and the much fatter one--that is export got emaciated for lockdown on its global market for months and some more time ahead. And the remittance inflow in May amid a shattered economy worldwide with miryards rendered jobless by the Covid-19 pandemic seemed enigmatic to some economists, who, however, fear the pitfalls lie ahead . There are explanations over the exponential remittance growth. In May, Muslims celebrated Eid-ul-Fitr, though mostly from home-stay, and the expatriates sent home more money, somehow or other, amounting to over 1.5 billion dollars, marking an 8.72 percent growth in July-May period. The figures are found in the data published by Bangladesh Bank. Finance Minister AHM Mustafa Kamal thanked the expatriates for their contribution to the economy ravaged by the pandemic at home and the world over. He also took credit for the achievement, noting that the government is giving 2.0 percent incentives on remittance this fiscal year. It has also "relaxed some rules recently after the virus crisis set in". The incentives led to a spike in remittance but inflow began to drop in March as hundreds of expatriates returned home due to the coronavirus pandemic, which has also left a vast number of the world population jobless. Growth in remittance inflow comes as a good news from the foreign front for the economy as export earnings in April dropped below the remittance receipt for the first time in its history. "Upset in set order in every sphere of life thus creates the urgency of resetting priorities in the evolving 'new normal' in a post-corona world order," says many a thinker. The expatriates sent 1.08 billion dollars in April, calming fears of remittance crash below $1 billion. Remittance accounts for 12 percent of Bangladesh's GDP. On the other hand, businesses exported goods worth 520 million, just little over half the remittance inflow. The export earnings missed the target by 85.37 percent. The year-on-year for April was 82.85 percent. In the pre-pandemic era, export earnings would normally outstrip remittances two to three times over. In July last year, remittances fetched around 1.6 billion dollars while exports were nearly 3.6 billion. "COVID-19 is really turning everything upside down. I've never thought there would be more remittance than export," researcher Ahsan H Mansur said. The executive director of Policy Research Institute warned that the pandemic may eat into remittances as well. A few other analysts also predicted bad times for two to three years ahead as the oil-rich Arab world is sent into turmoil while it won't be that easy to find new job markets as those in the western world are also pushed out of work into home quarantine. Hundreds of thousands of expatriate Bangladeshis returned home, meanwhile, as the outbreak caused devastating job losses across the world, he noted. "The expatriates are sending money from their savings or loans, not earnings," Mansur said. "I don't know what will happen in future as you can see what's happening now," said Rubana Huq, president of the garment exporters' lobbying group BGMEA. "Nothing is in our hands now," added AKM Salim Osman, the chief of knitwear exporters' association, BKMEA, the second segment of the country's main export industry. The country exported readymade garments (knit, woven) worth only 369 million in April, compared with 2.42 billion at the same time last year. The 34 billion apparel industry contributes more than 80 percent to Bangladesh's total exports, and employs around 4 million workers from lower strata of society. Meanwhile, the point-to-point inflation rate in May dropped to 5.35 per cent compared to 5.96 per cent in the previous month (April), official data showed. A year ago in May 2019, the inflation rate was recorded at 5.63 per cent. Bangladesh Bureau of Statistic (BBS) data, unveiled Tuesday, showed that the point-to-point inflation for the food items dropped significantly to 5.09 per cent in the last month from 5.91 per cent in the previous month of April. The inflation rate for the non-food items also fell to 5.75 per cent in May than that of 6.04 per cent in the previous month, the BBS data said. Emerging from the Executive Committee of the National Economic Council (ECNEC) meeting Tuesday in Dhaka, Planning Minister MA Mannan, unveiled the data of the consumer price index (CPI) of the country. He told reporters that the inflation both in the urban and rural areas had also dropped slightly. In the rural Bangladesh, the inflation rate in May was recorded at 5.65 per cent in the past month May compared to 6.08 per cent in April this year. In the urban area, the point-to-point inflation was also recorded lower at 4.81 per cent in the last month from that of 5.73 per cent in the previous month April. In this macroeconomic indicator also economists find the influence of fallout from the pandemic--that is, people's income contraction and resultant demand shrinkage. So, with the lifting of lockdown at home worldwide, spurring demand for consumption and export remains the main challenge in adapting to the reborn world.

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