Current Recession in the Global Economy and its impact on Bangladesh

Category: International Written by Md. Rafiqul Islam Hits: 5818

1. The world economy faces serious challenges in sustaining the strong economic growth of the last few years.

2. World economic growth to 3.4 percent this year, following the trend line down from 3.9 percent in 2006 and 3.7 percent in 2007.

7th August 2008, UN information services


1. Fannie Mae goes deeper into debt.

2. Italian economy suffers its 2nd quarter negative growth.

BBC world news, 9th August 2008


3. Present danger of the world economy comming to near standstill.

4. The major uncertainty for 2008 now emanates from the US economy.

UNN/INF/256, 10th August 2008.


1. United States, Japan & Western Europe control 60% of the total global economy.

2. Considering United States as the engine of Global growth, economists agree that Risk of Global Economic Recession is Rising.

3. On the other hand economists also has agreed that 2008 could be the fourth straight year in which growth of developing economies average near 7%. The growth is export led, 40% of the world trade – 3 trillion US$.

7th August 2008, UN information services


What is recession?

A difficult span of time for the economy, when there is,

- Less trade

- Less industrial activities than usual

- More unemployment

Oxford Advanced Learner’s Dictionary, University Press, 2000


Some features of Bangladesh Economy

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Year

GDP Growth

Domestic investment % of GDP

Export in million US$

Unem-ployment

Remittance in million US$

2004-2005

6.0%

24.5

8.6

-

3848

2005-2006

6.6%

24.7

10.4

-

4802

2006-2007

6.5%

25.3

12.6

2.5%

5975

Ministry of Finance, Bangladesh Economic Review-2007


Dependency on USA

* Export

Total 12177.86 (million US$ in 2007)

USA : 28.27%

UK : 09.60%

* Remittance:

Total 8978.47 (million US$ in 2007)

USA : 15.56%

UK : 14.87%

* Foreign Assistance

(Total 1630.58 million US$)

USA : 3.74%

Ministry of Finance, Bangladesh Economic Review-2007


Impact of USA led global recession in Bangladesh

- Export to USA & other European countries might be reduced

- Less remittance from USA & Western Europe

- Foreign aid flow may reduce

- Direct Foreign investment may decline


Some analysis

- USA and European countries economy in going to standstill, major contribution goes to oil price.

- Oil producing countries economy is booming

- Bangladesh maintains good relation with oil producing countries. They are also good source of investments, foreign aid & remittance

- Bangladesh produces and supply's, low cost garments to USA & Europe. Recession will increase demand of low cost garments in any case it will not reduced. Reduction in export to USA and Europe might not be happened.

- Bangladesh should explore possibilities of export of manpower in oil producing countries to minimise the export gap.

- Should go for increasing revenue and savings to reduce the impact.


Conclusion

- The impact will be minimum.

- If handled properly the impact of the global recession can be minimised.