October 25, 2023
DHAKA – Around 80 percent of businesses in Bangladesh opined that the country’s economy would avoid further decline in the next six months, according to the LightCastle Business Confidence Index (BCI) 2022-23.
They believe this will be made possible by the implementation of reforms outlined by the International Monetary Fund (IMF) to address economic instability.
Other factors that may blunt the economic decline include the gradual stabilisation of the effects of the Russia-Ukraine war on local and global markets, and the adoption of a cautious approach by all parties to ensure stability, they said.
However, businesses expressed concern about potential political instability arising from the impending national elections, lower levels of investor confidence and economic volatility during the initial months of implementing the IMF-recommended reforms.
LightCastle, in partnership with The Daily Star, launched the report recently after conducting a survey during the March-June period of this year.
It evaluated the perspectives of 167 industry leaders representing more than 25 sectors, including multinational corporations, local conglomerates, start-ups and SMEs, providing a comprehensive snapshot of Bangladesh’s dynamic business landscape.
Meanwhile, over the past six months, around 63 percent of businesses expressed disappointment with the economy, citing global and local crises as the main reasons.
The crises, mostly stemming from the Russia-Ukraine war, include supply chain disruptions, increases in global fuel and food prices, high import costs, a rise in value of the US dollar against the local currency, inflation, overnight changes to the exchange rate policy and mismanagement in the local market.
Despite these setbacks, businesses acknowledged that Bangladesh has maintained its economic stability over the past decade through the government’s timely formulation of effective policies and the persistence of its people.
“The economy is still facing challenges, but Bangladesh has been persevering and seeing improvements. Economic activity has been picking up pace,” said the head of marketing and communications of a life insurance company that participated in the survey.
In the domestic market, individuals, companies and the government are being more careful with their spending and focusing on managing revenues more efficiently due to limited cash flow.
“Considering the present circumstances, individuals are exercising prudence regarding their expenses and savings,” said the chief marketing officer of an e-commerce platform.
The government is also being cautious with its budget in order to bolster foreign exchange reserves.
“Hence, we can anticipate a sustained state of the economy, rather than a drastic decline,” he added.
However, a group of businesses think the forthcoming national elections may also cause a slowdown in business momentum, potentially impacting economic conditions.
The head of international business of a footwear brand said: “In an election year, the momentum of every industry tends to slow down. This means that exports will remain steady and there will be no significant decrease.”
However, it is unlikely that any new foreign direct investments will be made during this time, he added.