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Smaller South Asian nations not immune to the effects of global financial crisis

Sadiq Ahmed's picture

The smaller economies of Bangladesh, Nepal, and Sri Lanka continue to show optimism for their economies based on good remittance inflows and export indicators that demonstrate strong growth in 2008. Policymakers have used these statistics as evidence to believe that they have been relatively unaffected by the current global downturn. 

Unfortunately, this optimism is based on 12 month averages and do not highlight the significant drop in exports between October and December 2008 with some countries approaching negative rates. Coupled with the potential challenges that lie ahead, none of the countries are immune to the adverse effect of the global slowdown and there’s no room for complacency.

To minimize the negative effects, countries are advised to take strong measures to improve fiscal space to stimulate the economy without jeopardizing macroeconomic stability; improve the quality of public expenditures; strengthen competitiveness to protect export markets; reform the banking sector; and improve the implementation of public programs.  These measures are necessary to protect exports, income, and employment, especially as the global crisis deepens that will further hurt South Asia’s earnings from exports, remittances and tourism.

Comments

Submitted by Anonymous on
Dr. Sadiq, It was nice to see you in the Channel i yesterday. As a fellow Bangladeshi, I was very proud of your achievements. I think Bangladesh may not be largely impacted due to the current crisis. Only the export sector (mainly the garment industries) may have some reduction in new orders. However, I believe that there will be very minimal impact on the remittance. More then 60% of our NRBs are based in the middle east (KSA, Dubai, Bahrain, etc.) and work in semi/low skill jobs. As the governments of middle eastern countries are expected to spend more on project (e.g. infrastructure) to stimulate the economy, the demand for construction workers from Bangladesh will grow in the near future. I would say that this is in contrast with India (NRIs), who send a lot of skilled workers (IT related, etc.) in the foreign countries and will find that there scope has become limited due to the current crisis. Additionally, most of the NRBs we have in the developed countries (USA, UK, Canada, Australia and other European countries) took citizenship/PR (of those countries) and their wealth is invested in those countries. As they feel that they migrated to those developed countries, very minimal amount of their wealth goes to Bangladesh as remittance. I will be looking forward to hear from you soon. Thank you and regards, Kibria (about me: I am currently in the Citigroup, Japan - in Finance; M.A - Economics; B.B.A Finance)

Submitted by Anonymous on
Dr. Sadiq, It was nice to see you in the Channel i yesterday. As a fellow Bangladeshi, I was very proud of your achievements. I think Bangladesh may not be largely impacted due to the current crisis. Only the export sector (mainly the garment industries) may have some reduction in new orders. However, I believe that there will be very minimal impact on the remittance. More then 60% of our NRBs are based in the middle east (KSA, Dubai, Bahrain, etc.) and work in semi/low skill jobs. As the governments of middle eastern countries are expected to spend more on project (e.g. infrastructure) to stimulate the economy, the demand for construction workers from Bangladesh will grow in the near future. I would say that this is in contrast with India (NRIs), who send a lot of skilled workers (IT related, etc.) in the foreign countries and will find that there scope has become limited due to the current crisis. Additionally, most of the NRBs we have in the developed countries (USA, UK, Canada, Australia and other European countries) took citizenship/PR (of those countries) and their wealth is invested in those countries. As they feel that they migrated to those developed countries, very minimal amount of their wealth goes to Bangladesh as remittance. I will be looking forward to hear from you soon. Thank you and regards, Kibria (about me: I am currently in the Citigroup, Japan - in Finance; M.A - Economics; B.B.A Finance)

Submitted by Anonymous on
Missing your post for quite sometime. Hope to see you back on the bloggosphere soon.

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