The Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) predicts that three key economic indicators—imports, remittances, and foreign exchange reserves—would rise in the first quarter of the current fiscal year, which will be positive for the external accounts.
According to the chamber’s quarterly economic evaluation released on Tuesday, the country’s monthly imports could reach US $ 5.68 billion in September, up from the expected US $ 5.51 billion in August and the estimated US $ 5.39 billion import bill in July.
The current slowing economy may cause imports and remittances to decline in July, but they may rebound in the following two months, according to Chamber. The payment of US $ 1.42 billion through the Asian Clearing Union (ACU) for the May–June period may also cause the foreign exchange reserve to decline in July.
“Inflation increased in July, but it is expected to fall in August and September of 2024,” it added.
The MCCI said the economy showed some signs of improvement with the increase of foreign exchange reserves and remittances in June of the current year.
However, the country witnessed massive mayhem as students protested the quotas system for government jobs since the start of July, which dealt a big blow to business activities.
The MCCI said issues such as smooth logistics, banking services and security in industries needed to be addressed to ensure the revival of economic activities.
It stressed the need to overcome rising inflation, the slowdown in external demand, weak remittance inflow, the shortfall in revenue collection, slow public expenditure, depreciation of the taka, and a decline in foreign exchange reserves.
“The unemployment situation and low investment are other challenges.”
The authorities also need to protect small businesses and ensure proper electricity and gas supply, it added.
A gradual recovery was also noted in the manufacturing sector.
According to the MCCI, increased economic activity has resulted from the progressive removal of import restrictions, the clearing of a backlog of letters of credit, and the use of the crawling peg system to control the currency rate.
Nonetheless, the real estate industry continues to be slow, mostly due to rising property prices and declining consumer spending power.
“Besides, the higher prices of building materials have slowed overall construction work,” it said citing industry people.
“The devaluation of the taka against the US greenback is one of the major reasons for the increase in construction costs. Amid inflationary pressures, labour, and transportation costs have also risen.”
