The student protests that led to Prime Minister Sheikh Hasina's resignation on 5 August have heightened several risks for Bangladesh's economy, according to a bulletin issued on Wednesday by S&P, a USA-based global credit rating agency.
The bulletin stated that continued social instability could further impact credit metrics, slowing economic growth, fiscal performance, and reducing government revenue.
The S&P noted that if the socio-political situation stabilises soon and Bangladesh (B+/Stable/B) forms a new government, the damage to credit metrics may be contained.
"While credit buffers have diminished, we do not expect immediate strong pressures on the credit ratings," the bulletin read.
S&P anticipated that exports would be significantly lower than previous expectations, with a prolonged impact on Bangladesh's external balance sheet.
Substantially lower exports could weaken foreign exchange generation, further depleting the central bank's usable reserves.
The bulletin also highlighted that a steady flow of remittances will be crucial for Bangladesh to avoid a severe forex shortage. Prolonged disruptions to communication systems could negatively affect normal financial payments, S&P expressed concern.
