The economy of Bangladesh is experiencing significant challenges in as many as six out of nine key economic indicators prepared by the Bangladesh Bank, said Metropolitan Chamber of Commerce and Industry (MCCI) on Monday.

The six parameters are foreign exchange reserves, import volume, domestic debt, export receipts, food stock, and Consumer Price Index (CPI) inflation.

The chamber made the remarks in its review of the economic situation during the second quarter (October-December) of the current financial year 2023-24.

It urged the government to take more actions to stabilise foreign exchange reserves, manage inflation, enhance revenue earnings, ensure proper electricity and gas supply for economic activities, and improve the food situation.

The MCCI, however, mentioned that the economy showed some signs of improvement during the quarter. According to it, the government took quick and decisive measures to address the economic fallout.

The chamber observed that exports and imports are two important drivers of the economy, and amid the present situation, both the areas have done better.

However, there was slowdown in external demand, weak remittance inflow, shortfall in revenue collection and slow public expenditure, rise in inflation, depreciation of the taka, a decline in foreign exchange reserves, unemployment situation and low investment in recent months, it said.

Inflation

The rate of inflation (point to point) dropped to 9.41% in December 2023 from 9.49% in November 2023, MCCI said.
Though the rate eased to some extent in December, it was still high because of supply bottlenecks due to the Russia-Ukraine war and rise in domestic demand, it observed.
A year ago, in December 2022, the inflation rate was lower at 8.71%.

The food inflation (point to point) also went down in December 2023 from the previous month, but the non-food inflation rose during the month.
The general, food and non-food inflation (point to point) at the urban areas fell against rural areas in December 2023.

Export and import

The country’s overall export earnings in the first half (July-December) of the current fiscal year marked 8.55% less than the strategic target of US$30.11 billion.
Total value of custom-based imports during the period amounted to $33.00 billion, which is around 20% less than the target of $41.20 billion set for the period.

Besides, the custom-based imports in December alone also slipped 13.40% to $5.23 billion from $6.04 billion in the same month of the previous fiscal year.

Remittances

The remittance inflow in the first half of the current fiscal year slightly surged to $10.80 billion from the same period a year ago. The amount is 2.89% more than $10.49 billion received in the corresponding period of the previous year.

Power generation

The overall power generation capacity in the country witnessed a significant rise in 2023.
The generation reached a record high of 30,700 megawatt (MW) in the year, increasing around 5000 MW, MCCI said.

However, the demand for electricity did not match the growth, it added, quoting data from the Bangladesh Power Development Board (BPDB), the Bangladesh Energy Regulatory Commission (BERC) and the Sustainable and Renewable Energy Development Authority (SREDA).
“As a result, the government may need to make higher capacity payments, considering the combination of grid capacity and off-grid power (primarily captive power),” the chamber remarked.