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The Economy Slumbers as Power Eludes Bangladesh

Zahid Hussain's picture
Photo Copyright of Jugantor

Have you ever tried explaining to non-economists what the consequences of resource misallocation can be for the economy?

What will happen if you invest enough in some sectors and too little in others? The answer is likely to be that you have enough production in sectors where you got your investments right and too little in the under-invested sectors. That may be correct in some cases, but it ignores the interdependence between the adequately invested and underinvested sectors. As a result, you may have too little production in the sectors where you have invested enough because you have too little production in the sectors you have neglected to invest.

Connecting Sri Lankans to Prosperity

Eliana Cardoso's picture

The presidential election in Sri Lanka this January resulted in an easy win for the incumbent Mahinda Rajapakse. The end of the long lasting civil conflict with Tamil separatists, strong remittances and an IMF agreement boosted investors’ confidence. Foreign exchange reserves recovered from about one month of imports in the first half of 2009 to six months of imports by January 2010.

Now that the war is over and the global economy recovering, the government needs to grasp the opportunity to do the right things and avoid hurting confidence in the country’s stability, which is key to the rise in foreign investment and tourism.

The bad news is that the withdrawal of GSP Plus by the European Union countries can hurt industrial exports. The EU decision is worrisome. Thanks to the increase in manufacture exports from 6 percent of total exports in 1975 to 60 percent in 2005, firms began to lead Sri Lanka‘s connectivity with the rest of the world.

Full Speed Ahead: Internet Traffic Growth Unaffected by Financial Crisis

Joe Qian's picture

Reading about the financial crisis and the effects that have rippled around the world, it’s always heartening to find something positive in the midst of piles of red ink and pessimistic expectations.

Although the majority of industries and economies around the world have suffered due to the downturn, Internet traffic growth accelerated at an increasing rate in 2009 compared to 2008 with no discernible slowdown due to the crisis. According to data released by Telegeography, every single region around the globe registered growth in internet traffic, or flow of data. South Asia has registered over a 100% increase, higher than the 79% posted worldwide, although it must be noted that South Asia had a lower baseline capacity.

The Resilience of Bangladesh's Economy May Again be Tested This Year

Zahid Hussain's picture

The Bangladesh economy entered FY10 in a position of strength, notwithstanding some pretty tough global circumstances. Good recovery in agriculture, a sustained growth in exports and remittances, and a steady growth in services helped achieve an estimated overall growth of 5.9 percent in FY09, compared with 6.2 percent in FY08. A decline in international commodity prices driven by the global recession and an improvement in domestic food supplies brought inflation down from 10 percent in FY08 to an estimated 7 percent in FY09. Rice prices have remained stable too at nearly 40 percent below the peak reached in April, 2008. The economy has shown reasonable stability in terms of most other macroeconomic indicators. The external current account has been in a large surplus; the exchange rate has been stable; foreign exchange reserves have reached record high levels of nearly $7.5 billion; fiscal balances have been contained; and private credit growth has remained decent.

This is all good news but it doesn’t mean Bangladesh goes totally unscathed by those tough global circumstances.