Macroeconomic stability critical for economy: DCCI
Dhaka Chamber of Commerce & Industry (DCCI) President Ashraf Ahmed has urged the interim government to restore law and order to boost public confidence and maintain steady production and export flows.
He made this call at a seminar titled "Bi-annual Economic State and Future Outlook of Bangladesh Economy (January-June FY2023-24): Private Sector Perspective," organised by DCCI on Saturday, said a press release.
In his keynote address, Ashraf Ahmed emphasised the need for the Central Bank to reverse its current strategy of higher interest rates and tighter liquidity management once inflation is under control.
He expressed optimism that balance of payment issues would be resolved soon, allowing exports to stabilize, and suggested that a fall in the US dollar rate could ease the devaluation of the taka and lower energy prices.
Ashraf highlighted the importance of ensuring stable energy supply to sustain the country's growing export momentum. He also called for mid-term reforms in government policies and procedures to foster a better business environment.
While acknowledging that a small segment of banks is struggling with non-performing loans (NPLs), he noted that the majority of banks remain in good health and stressed the need for systematic stability in the banking sector to ensure smooth transitions for borrowers and depositors.
Addressing challenges faced by the CMSME sector, Ashraf pointed out that high interest rates, a rising exchange rate, and increasing capital costs have restricted effective credit flow.
He urged authorities to maintain loan disbursements to CMSMEs to ensure adequate working capital and recommended a more flexible monetary policy once inflation stabilizes. He added that boosting tax revenue would help ease public sector loan repayments.
To control inflation, Ahmed suggested strengthening domestic supply chains, minimising waste, modernising market logistics, and improving market mechanisms.
He also called for measures to rebuild investor confidence and support private investment, which would help sustain industrial production and bolster foreign currency earnings.
The electronics and semiconductor sectors were highlighted as promising areas for export growth alongside the ready-made garment industry.
Dr Khan Ahmed Sayeed Murshid, Economist and Former Director General of Bangladesh Institute of Development Studies (BIDS), emphasised the need for quick responses to both economic and non-economic challenges. He stressed the importance of inclusive growth, food security, energy stability, and skill development.
He also highlighted the potential impact of AI on the global economy and urged improvements in public governance, advising the private sector to prepare for new opportunities.
Dr Mohammad Abu Eusuf, Professor of Development Studies at the University of Dhaka and Executive Director of RAPID, underscored the critical importance of maintaining macroeconomic stability for overall economic development.
He called for realistic data on population and GDP to accurately assess the economic situation. Dr Eusuf identified the three Rs—RMG, remittance, and rice production—as key pillars of the economy and emphasized the need for product diversification to drive export growth.
He also suggested that Bangladesh's leather sector could generate $10 billion annually with adequate support and advocated for an enhanced tax-to-GDP ratio and better coordination among monetary, fiscal, and market policies.
Dr Md Salim Al Mamun, Director of the Chief Economist's Unit at Bangladesh Bank, mentioned that reforms are underway in the financial sector, though growth in the service sector has been slower than expected.
He reaffirmed Bangladesh Bank's commitment to modernising policies and highlighted measures such as policy rate hikes and tightening of monetary policy to combat inflation. However, he echoed the sentiment that the primary challenge remains ensuring macroeconomic stability.
DCCI Senior Vice President Malik Talha Ismail Bari and board directors were also present at the seminar.
