The past few years have been topsy-turvy for the global economy, especially for developing countries like Bangladesh. The external shocks have seeped into the local economy, starting with the pandemic and further exacerbated by the global geopolitical standoff and prolonged supply chain dislocations. They are translating into sharp currency depreciation, the balance of payment deficit, inflation, and budget deficit-related challenges. The burden of macroeconomic turbulence is gradually being felt at the consumer level.
The pandemic has receded through the invention, mass production, and distribution of vaccines in record time. However, several geopolitical challenges have disrupted economic recovery.
The advent of the Ukraine-Russia war has swiveled the global commodities market. This is a consequence of the sanctions imposed on Russia by the Western economies. Russia’s importance as a global supplier of the following commodities has resulted in severe supply-side shocks and skyrocketing commodity prices.
The commodity prices have receded over the last few months. It has been possible mainly due to recessionary bouts across the European Union (EU) and the United States (US). However, prices have remained well above the pre-war level.
Another structural shift witnessed over the last few years has been the confrontational stance between China and the US, initially manifested as a trade war. The latest impasse over the visit of a senior US-elected official to Taiwan has led to an assertive response from China. The possibility of an armed conflict over Taiwan cannot be ruled out in the medium term. Economists are predicting a gradual reversal of trade liberalization as the geopolitical fault lines are increasingly becoming more pronounced, leading to de-globalization.
LightCastle’s latest publication: ‘Bangladesh Economic Update 2022’ sheds light on the challenges mentioned earlier and charts a probable way forward for the Bangladesh economy by addressing the following critical questions:
| To learn more
Note: This report was originally published on the LightCastle Partners website.
Contact us for a comprehensive understanding of the investment landscape in Bangladesh