Shahid Islam
As morning shows the day, the year 2018 is headed toward posing a double challenge for the government, and the nation.
Election uncertainties aside, the economy is flip-flopping; according to the indications emitted by whopping price hikes; reduced remittance and export earning; stalled employment opportunities; frozen real estate market and, the impact of black money that will have polluted the ‘white economy’ during the pre-election spending- spree by candidates of all denominations.
Violence & economy
Violence in coming months is expected anyway; whether the election is fair and inclusive, or not. Violence and instability is a potent nemesis to the economy. Historically, most of the election years since independence have been violent, exacting a severe toll on the economy.
Foremost, trade deficit always mounted during the election year; the latest example of which came into focus during 2007-2008 fiscal year when the deficit soared to $3.9 billion, from $ 2.3 billion in 2006-2007.
Election-time uncertainties also negatively impacted remittance inflows. In 2008-2009, remittance amounted to only $9.7 billion, which, in 2009-2010, increased to $11 billion. Similarly, inflation rose to 6.99 % in 2008-2009, amidst political chaos relating to election, but dropped to 6.4 % in the following fiscal.
Impact on GDP, reserve
The impact on the GDP of such negativities is paramount. The GDP grew by 5.05 % during 2008, which was an election year. It went up to 5.57 % in 2009. Meanwhile, election- time uncertainties choked off foreign currency reserve to $22.34 billion in late 2014, which went up to $28 billion in the following year.
Lately, the World Bank had disputed the Bangladesh Bureau of Statistics’ (BBS) data of 7.28 % GDP growth in the 2016-17 fiscal, which the global lender said didn’t cross the 7 % mark.
Debt & deficit
And, according to a number of internationally-published reports, the current account deficit will yawn further in 2018 as the expected trade deficit and lower remittances begin to make their impact; compelling the government to borrow further to finish the development undertakings as the much-needed pre-election stunt to convince voters.
That will constitute an unwanted reversal in the wheel of fortune. In 2016, public (government) debt dipped to 27.20 percent of the GDP, a record low since 1995 when it averaged at 39.45 % until 2015; hitting an all-time high of 50 % in 2000. Earlier, the UN Economic Forum predicted the 2018 fiscal deficit to be 5 % of the GDP, while inflation to remain within the bounds of 5.4 %.
Yet, inflation registered 5.83 % in December 2017, according to the minister of planning, and, continuous price hikes of essential commodities might have already pushed it to 6 % by mid-January 2018.
Consensus vs. confrontation
Despite the nation facing such harsh realities, there is no indication as yet that the economy, or the political ambiance that primes the internal dynamics of economic growth, will move toward anything better in coming months.
The BNP is still adamant on having a national government, if not a care taker one, under which it’s willing to join the polling. The government is equally determined to holding the election under the incumbent set-up, as per the amended constitutional mandate.
Unless there is a deal of some sort, between the BNP-led allies and the governing AL, to overcome this protracted limbo, confrontation is inevitable; as are disruptions of export, import, and other productivities.
Polarization and danger
Sources say, JP, the third largest political party in the country, is parleying simultaneously with the governing AL and the BNP to have as many candidacies approved from each of the two major parties as a prerequisite to choosing its electoral alliance, on which depends who shall form the next government; BNP or AL.
That too is as yet fluid, embryonic, and uncertain. The ruling AL may once again take the JP to its side in order to deprive the BNP of any hope of forming the next government; provided the BNP joins the polling.
That foists the election itself into an uncertainty; like the one held in 2014, when the main opposition BNP abstained from joining the poll and turned the election itself into a farce following 154 of the seats — more than half of the total needed to form the government — having won by the ruling AL, without facing any contest.
This lack of inclusivity robbed the 2014 election of the rubric of minimum credibility needed to show that, democracy is still a functional entity in Bangladesh.
Poverty trap
Existence of democracy, rule of law, and the economic wellbeing of the people are always positively correlated. Only an inclusive election, and a credible, functional democracy can retrieve Bangladesh from perennial political instability and the poverty trap that engulfs almost 1 in 4 of its citizenry (24.3 % of the population), of which 12.9 % live in extreme poverty.
More worryingly, reduced flow of remittance, which has been very much visible in recent years, is negatively impacting the rural poverty reduction dynamism which decreased from 35.2 % in 2010 to 26.4 % in 2016. Better employment prospect also reduced urban poverty from 21.3 % to 18.9 % during the same period.
Dreadful scenario
Today, the scenario had changed, almost abruptly, as land price had halved in rural areas, while in major cities, developers are stuck with unsold apartments for years, with no sign of the situation turning to anything better, any sooner. This is wary, scary and dreadful. Whether the government is aware or not, ordinary people are cash-starved, poverty-stricken, and thoroughly demoralized.
Unless the upcoming election is seen and perceived as being a fair, credible and inclusive one, the economy will suffer a major jot — may be a bang of some sort — as did democracy since 2015. That in turn can wither and wash away the expectation of the country becoming a mid-income one any time sooner. Can you hear us, dear politicians?
- Courtesy - weeklyholiday.net
