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The Policy Research Institute of Bangladesh (PRI), in collaboration with the Department of Foreign Affairs and Trade (DFAT) of the Australian Government, today organized a discussion titled “Monthly Macroeconomic Insights: Global Turbulences and a Rise in External Sector Vulnerabilities”.
The keynote presentation was delivered by Dr. Ashikur Rahman, Principal Economist of PRI. He said, “Global turbulence creating serious headwinds for economy. Bangladesh has had to navigate an exceptionally turbulent global environment over the past six years. The shocks began with COVID-19, followed by the disruptions of the Russia–Ukraine war, and more recently renewed global uncertainty from trade tensions and rising geopolitical conflicts,”
At the same time, he said Bangladesh itself has experienced significant political transitions, with three governments in just two years; each bringing policy uncertainty and institutional adjustments. “It is therefore not surprising that the economy has faced strong headwinds, with pressure on growth, the external sector, and inflation management,”
The program was graced by Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), as the chief guest. In his remarks, he highlighted the need for a more flexible exchange rate and further depreciation of the taka to better reflect market conditions.
Hatem noted that many ready-made garment (RMG) factories are currently operating at only 50–60 percent capacity, with several incurring losses each month. He also mentioned that exports have been declining over the past seven months and are projected to continue declining until June.
Emphasizing the need for urgent action, he called for a clear roadmap for LDC graduation, despite its deferment, as well as reforms in the tax and regulatory systems to strengthen competitiveness and ease compliance.
The programme was chaired by Dr. Zaidi Sattar, Chairman of PRI. He warned that global developments are having serious implications for Bangladesh’s external sector and overall economic stability.
In this context, he argued that Bangladesh’s request to the United Nations to defer its graduation from the least developed country (LDC) category has gained stronger justification.
He noted that it would not make much sense for the UN system to insist on immediate graduation simply because Bangladesh has already met the criteria.
“I believe the deferment request now has stronger justification,” he said, expressing hope that the graduation timeline could be extended by one or two years, similar to the deferment granted during the COVID-19 pandemic.
Turning to trade developments, he said Bangladesh is currently dealing with three major trade arrangements that will significantly influence its economic trajectory.
The first is the US-Bangladesh trade arrangement, which is yet to be fully ratified but already involves commitments from the Bangladesh government.
He noted that the recent US Supreme Court ruling removing reciprocal tariffs offers some positive news for Bangladesh. However, he cautioned that the current 15 percent tariff imposed on Bangladeshi exports is applied on top of the existing Most Favoured Nation (MFN) tariff, making the overall situation less favourable.
At the same time, he pointed to potential opportunities under the Buy America Important Act 2025.
Dr. Sattar also highlighted structural challenges in Bangladesh’s tariff regime, noting that the United States considers the country’s trade regime overly restrictive due to numerous para-tariffs.
Looking ahead, Dr Sattar projected that reconstruction effort in the Middle East after the current conflict could create strong demand for Bangladeshi workers.
The discussion was moderated by Dr. Sadiq Ahmed, Vice Chairman of PRI. In his opening remarks, Dr. Sadiq highlighted: “With a new government in power, the outlook for a recovery of investment and GDP growth has improved. This recovery of GDP growth and investment will boost imports. A key policy question is where the financing will come from to support the associated growth in imports,”
He added that imports will need to grow by 8–10 percent to support GDP growth of 6–7 percent. At the same time, debt servicing is increasing rapidly, which will require additional financing.
“Remittances cannot be expected to grow at their present level over the medium term and will likely stabilize at a trend growth of 5–6 percent. Therefore, the main source of import financing will have to be a double-digit expansion of exports,” he said.
He emphasized that achieving such export growth would require export diversification, a competitive exchange rate, low inflation, reduced trade protection, improved trade logistics, increased foreign direct investment (FDI), and stronger skills development.
Dr. Sadiq also noted that the outlook for exports is clouded by several uncertainties, including declining exports to EU markets, the impact of the India–EU FTA, tariff uncertainties in the United States, the pending LDC graduation, and the latest external shock arising from the Iran war.
During the discussion, Dr. M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh (PEB), emphasized that Bangladesh has entered a phase of early macroeconomic stabilization since September 2024, but cautioned against complacency.
Harry Thompson, First Secretary (Political) at the Australian High Commission in Dhaka, noted that Bangladesh, like many other countries, is facing external vulnerabilities due to ongoing global conflicts.
The event concluded with closing remarks by Dr. Khurshid Akam, Executive Director of PRI.
https://thedailyexpress.news/news/business/1f11aeed-ef54-62b0-a0f1-f4ab90bb6d0e