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Economy of Bangladesh in the context of the global economy

Since 2013, the investment rate is declining compared to GDP. Although the government has taken various initiatives including the formation of Bida to increase domestic and foreign investment. Besides, there are some other indicators of downward trend. However, the situation of the world economy needs to be seen a bit more.
The economy of Bangladesh is going through a change. The downside trend is seen in the growth of the main economic indicators here.

Since 2013, the investment rate is declining compared to GDP. Although the government has taken various initiatives including the formation of Bida to increase domestic and foreign investment. Besides, there are some other indicators of downward trend. However, the situation of the world economy needs to be seen a bit more.
Although some slowdown in 2016, economic growth is expected to grow somewhat in 2017 and 2018 in emerging markets and developing economies. But due to uncertainty in the United States administration’s policy decision, there is a possibility of deviation in estimation.

Better growth has also been estimated in advanced economies for the year 2017-18. Due to the adoption of the expected policy, the economy of China is projected to be good growth. And India, Brazil and Mexico are expected to grow somewhat less than the economic forecast. These predictions have been taken into account by the impact of the US policy’s policy differences. It is also taken into consideration that oil prices could be influenced by the agreement between OPEC (Oil Exporters’ Alliance) member and major oil exporting countries in anticipation of Outlook in the world economy.

Oil prices have risen a lot in 2016. Which was 100 dollars per barrel in 2015. After that it dropped to $ 40. After the OPEC and oil export major major oil companies decided to reduce the oil production, oil prices have risen to $ 50. Brent crude oil prices have increased by 52 percent in 2016.
Meanwhile, despite the increase of labor export in 2016, the expatriate income has come down. In the first half of the fiscal year of 2010, remittance revenues have decreased drastically. During this period, remittance revenues dropped 17.33 percent to $ 6.7 billion. Remittance revenues reduced by two and a half percent in 2016 fiscal year. But during this time, the export of manpower increased 36 percent.

According to the update, remittance dropped from around 17 percent in Gulf regions during July-December. But there are 55 percent remittance in the country. Malaysia, Singapore, the United Kingdom and the United States also reduced sales of 9.53, 13.33% and 37 percent remittance respectively. As the oil price drops, government spending in Gulf countries is cutting costs. Besides, they took different reform programs. The impact of the expatriates of these countries has been affected. But due to non-institutional remittance, remittance has decreased slightly. And due to the decrease of remittance, there is a negative impact on the foreign currency reserve. So, we need to take quick action to get remittance through institutional way. Besides, it is necessary to establish a training institute primarily for skilled manpower export.
In 2015, the average annual inflation rate was 6.19 percent, down from 5.52 percent in 2016. Based on point-to-point basis, the rate of inflation has dropped to 5.3 percent. Which was 6.9 percent in the previous year. Inflation in food and non-food products and inflation declined due to political stability. In December 2016 food inflation declined to 5.88 percent. Which was 5.88 percent in December 2015. In non-food products, the rate of inflation declined to 4.94 percent. Which was 7.5 percent at the same time in the previous year.
On behalf of the entrepreneurs, demanding reduction of interest rate on bank loans, but did not take any action from the Bangladesh Bank regarding this. It is not possible to apply the same instruments (repo and reverse repo). However, the Bangladesh Bank was involved in increasing the flow of private sector loans.

There is a possibility of higher growth in emerging economies such as Bangladesh. But for this, the government will have to take effective action on some matters. Otherwise, the economy may have to fall into difficult times.

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