Bangladesh’s macroeconomic recovery to stability helped the capital market mark an upward trend in the last few weeks.
The benchmark index of the capital bourse extended its gaining streak for three consecutive weeks,driven by investor interest in stocks with favourable earnings for the recently closed quarter.
Showing a sign of macro recovery at stability, Bangladesh's capital market scored an upward movement this week as it gained 89.48 points to reach the level 5355.
The percentage change for the broad index was 1.70 percent . Market participation was 8.55 percent . The average daily turnover of the market was Tk554 crore.
In response to surging food inflation, the interim government and Bangladesh Bank have introduced measures to ease commodity imports and bolster staple food allocations, such as temporarily removing the letter of credit (LC) margin on essential imports like edible oil, sugar, and chickpeas, and exempting commodity importers from the 25 percent single-borrower exposure limit until Ramadan to stabilize prices.
Despite these efforts, Bangladesh faces significant economic challenges, including costly and environmentally harmful LNG power projects projected to cost $50 billion and pose public health risks.
Meanwhile, the Trading Corporation of Bangladesh plans to sell essential food commodities at subsidised rates to one crore families through smart cards starting January, aiming to alleviate the burden on low-income households.
The country's foreign exchange reserves briefly crossed the $20 billion mark due to substantial remittance inflows but dipped below this threshold after clearing a $1.5 billion payment to the Asian Clearing Union.
October's export earnings showed a remarkable 20.65 percent growth, driven by the readymade garments sector despite ongoing labor unrest.
In a significant development for overseas employment, Saudi Arabia has begun recruiting Bangladeshi nurses, signaling a shift towards higher-skilled labor exports.
However, the interim government has scaled back the ambitious project of developing 100 economic zones, focusing instead on a few prioritised zones with clear timelines for completion.
Businesses continue to struggle with high-interest rates, despite the central bank's defense of its tight monetary policy as a necessary measure to combat inflation.
Foreign aid for development projects is under review, with the government considering cuts due to public agencies' failure to implement projects on time.
In the banking sector, the Bangladesh Bank is working on a "Bank Resolution Act" to facilitate mergers, acquisitions, and recapitalizations.
To support agricultural production, the central bank has urged banks to keep the cash margin rate for fertilizer imports at a minimum.
Additionally, the interim government is seeking budget-support loans from international lenders to provide breathing space for the economy, given recent disruptions in the balance of payments.
Over the last three months, Bangladesh received over $7 billion in remittances from expatriates, which is crucial for economic stability.
However, the National Board of Revenue (NBR) reported a shortfall in revenue collection, prompting increased government borrowing from the banking sector.
New fees for online tax payments have been introduced to streamline the payment process.
An economic partnership agreement with Japan is expected to boost bilateral trade and open new opportunities for Bangladesh.
Despite these positive developments, labour unrest due to delayed wage payments in the garments sector remains a significant challenge.
To ensure a stable supply of essential commodities during Ramadan, the central bank has allowed imports of 11 key items on 90 day credit.
The International Monetary Fund (IMF) has noted that switching to budget-support loans will provide some breathing space for the economy amidst political tensions and external financing disruptions.
The central bank has also urged banks to keep cash margins low for fertilizer imports to maintain agricultural productivity.
The NBR shortfall in revenue collection continues to impact fiscal stability, while government borrowing from banks has increased to meet budget deficits.
Moreover, the recent dip in foreign reserves below $20 billion, after paying ACU dues, underscores the fragility of the economic rebound. With export earnings driven by the robust readymade garments sector, despite labor unrest, and the recruitment of Bangladeshi nurses by Saudi Arabia indicating a shift towards higher-skilled labor exports, Bangladesh's economic landscape is marked by a blend of strategic measures aimed at stabilization and growth, while addressing various internal and external challenges.
The planned economic partnership agreement with Japan is anticipated to enhance bilateral trade, providing new opportunities for the country's economic expansion.
Meanwhile, the interim government's focus on select economic zones, rather than the previously ambitious 100-zone project, reflects a more targeted approach to development.
In summary, Bangladesh is navigating a complex economic landscape with a mix of strategic measures aimed at stabilization and growth, addressing significant internal and external challenges along the way.
