Growth in export, remittance pin hope for economy

Bangladesh’s economy has received a significant boost as the fiscal year 2022-23 concluded with record highs in export earnings and remittance inflows, alleviating pressures on foreign currency reserves.

Exporters raked in $55.56 billion during the fiscal year, marking a 6.67 percent increase from the previous year and setting a record for the highest export revenue in the nation's history.

Additionally, remittances saw a surge in June, with expatriates sending home $2.19 billion ahead of Eid ul Azha, the highest in 35 months.

This represented a 2.75 percent increase compared to the previous fiscal year, with the total remittance inflow standing at $21.03 billion.

Economists believe these positive trends will bolster Bangladesh’s foreign exchange reserves.

Dr. Atiur Rahman, former governor of Bangladesh Bank, observed that the concluded fiscal year showcased positive developments in the country’s external accounts, with both remittances and export earnings posting growth.

Dr. Rahman noted that despite economic turbulence, remittances grew by 2.8 percent and exports by 6.67 percent. He expressed optimism but opined that the figures could have been higher had the country adopted market-driven solutions earlier.

He further emphasized the urgency of implementing the proposed monetary policy, commending the 'corridor system' on interest rates as a commendable beginning.

“If needed we may increase the spread to give some more room to the banks to make the financial system more competitive. The risky borrowers must pay more to the banks,” he noted.

He also called for the rapid implementation of the foreign exchange rate policy.

“Multiple exchange rates must converge to a single rate as early as possible,” added Dr. Atiur, who is also the chairperson at development think tank Unnayan Shamannay.

These record figures in export and remittances present an encouraging sign for the country’s economy as it navigates a global economic landscape fraught with uncertainties.

Innovation in foreign exchange operations is critical for attracting more foreign direct investments, says Dr. Atiur Rahman.

He praised Bangladesh Bank for permitting foreign companies to retain their capital and earnings in foreign currency accounts, which would save them from currency conversion losses.

However, Dr. Atiur pointed out that foreign investors still face a myriad of bureaucratic hurdles in obtaining permissions or clearances. While the Bangladesh Investment Development Authority (BIDA) has set up one-stop services, he stressed the importance of making these operational in a real sense.

He also mentioned that erratic electricity supplies have hampered higher growth in export earnings. The government is reportedly making concerted efforts to improve the electricity supply situation, which should positively impact export earnings in the current fiscal year.

Dr. Atiur added, “Geopolitical tensions are affecting our export potential. However, if we can synchronize the implementation of our monetary and foreign exchange rate policies along with a steady supply of energy, Bangladesh will surely witness an early return to external account stability.”

Dr. Mohammad Abdur Razzaque of Research and Policy Integration for Development (RAPID) labeled the growth in remittance as expected, especially ahead of Eid, and termed the export earnings as ‘impressive’.

He attributed the growth in remittance to exchange rate adjustments and government incentives.

“Export data from the Export Promotion Bureau (EPB) should match with Bangladesh Bank transactions for a more accurate assessment of international trade,” Dr. Razzaque suggested.

He commended Bangladesh Bank for maintaining good transaction records despite the global export market's negative trends.

The EPB revealed that businesses exported products worth $5.03 billion in June alone, a 2.51 percent increase compared to the same period last year.

The total remittance through legal channels stood at $21.61 billion, an increase of 3 percent compared to last year. However, export revenue fell short of the $58 billion target by 4.21 percent, or $2.44 billion.

The export of readymade garments accounted for $46.99 billion, a 10.27 percent increase compared to the previous fiscal year, according to EPB data.

However, export earnings from leather and leather products declined by 1.75 percent to $1.22 billion in the 2022-23 fiscal year.