Trade policy and macroeconomic shocks

New evidence on the relationship between trade policy and macroeconomic shocks confirms that emerging-economy trade policy has become more responsive - tying variable protection - to economics shocks under the WTO.

Link on the issue. 

Innovative policy by BB?

Bangladesh Bank bought about $648 million from commercial banks during 1 December 2012 to 16 January 2013 with the central bank's 30-day bills and Islamic bonds, instead of paying in cash. Paying in cash basically increases the cash liquidity position of banks, which may fuel inflation up, which is the logic of the central bank behind taking such decision. Definitely, this is an innovative policy!

Now, what is the other side of the coin? Extracting foreign currency from the market means that there will be a shortage of foreign currency, which may depreciate Taka against foreign currencies. If this works, then inflation will increase. (Obviously, Taka depreciation has positive impact on export and remittance earnings) Again, there was an opportunity that excess foreign currency in the market could appreciate Taka, which could help decline in inflation; so in a way, this innovative policy loses this opportunity.

BB should be more prudent while giving explanation for its policy choice. Based on the aforesaid stance, it seems that BB is more worried about exchange rate stabilization; it wants to continue to have a managed floating exchange rate regime without taking any risk for inflation prospects - which is not problem. Controlling inflation is a secondary goal in this particular case.

Report on the issue!       

Reduced growth forecast by WB

The World Bank released its new 'Global Economic Prospects' report, where it is mentioned that the Bangladesh economy will grow at 5.8% in FY2013, while considering all the latest information. Just for your information, the GDP growth in FY2012 was 6.3%.

The link of the report.
News on the report.

IRBD 2013, CPD

Centre for Policy Dialogue (CPD) publishes its analytical review of Bangladesh's macroeconomic performance in FY2013 under its IRBD programme. Along with overall macroeconomic assessment, it provides stories on the impact of recent petroleum price increase, performance of manufacturing sector in Bangladesh, and state of governance in the banking sector.

Link of the report! 

Impact of oil price increase on agri production

Dr Abul Basher writes in the Financial Express on the impact of recent petroleum price increase on the agriculture production, applying both theoretical and empirical arguments. A noteworthy reading!

Link of the article.

Record amount of Remittance inflows!

The first day the new year brings wonderful new for the economy. Non-resident Bangladeshis sent an record amount of $14.2 billion in 2012. Sharp increase in manpower exports in 2010 and 2011 and rapid depreciation of Taka against US$ since early 2012 were the basic reasons of this success. Obviously, people were encouraged to send money through former bank channel, thanks to the efforts made by Bangladesh Bank and all commercial banks.

Report on the news. 

New index for Dhaka bourse!

Designed by Standard and Poor's (S&P), the Dhaka Stock Exchange (DSE) is going to introduce a new index based on free float system (market cap of an index's underlying companies is calculated by taking the equity's price and multiplying it by the number of shares available for trading). After so many years, DSE found its existing index flawed! It will be interesting to observe how the new index incorporates the recent stock market debacle and hope, it will reflect in the new index too.  

News on the issue.  

Interview of YV Reddy !

Asjadul Kibria takes an interview of YV Reddy, the ex-Governor of Reserve Bank of India, where Mr. Reddy talks on diverse issue such as the need for globalized expertise for the central bank, the success of Bangladesh in various social indicators, and the need for close regional integration. He also talks on the role of monetary policy (the central bank) and its relation with fiscal policy (the finance ministry). A worth reading one! 

Link of the interview.  

Moody's Review of BD economy...

Global rating agency, Moody's Credit Outlook assesses Bangladesh financial sector while considering its link with real and external sectors.

A news report on the issue. 

American Tariffs, Bangladeshi Deaths!

Sanchita B Saxena, associate director of the Center for South Asia Studies at the University of California, Berkeley, writes on the link between tariffs imposed by US government on Bangladeshi RMG products and the final prices of those goods in the US market and tries to argue that low tariffs on imports from Bangladesh could play an encouraging inputs to Bangladeshi RMG producers to improve labor standards without losing its competitive advantage. She suggested this because US government has been urging the Bangladeshi government to raise wages and improve working conditions. I think, this is a right message. 

Link of the article.   

Profile of Jeffrey Sachs

In 'People in Economics' section in Finance and Development, a quarterly publication of IMF, Prakash Loungani writes the profile of Jeffrey Sachs, a leading development economist.

Link of the article. 

Mankiw reads Obama's mind!

Professor Gregory Mankiw reads, in his own way, President Obama's confused mind (one is the Moderate Obama and the other is the Liberal Obama) on fiscal cliff related issues! Interesting...

Here is the link. 

Growth Report on Bangladesh, WB

World Bank, Dhaka office publishes its growth report 'Towards Accelerated, Inclusive and Sustainable Growth in Bangladesh'. The main points of the reports are as follows:

• In spite of global shocks and natural crises, Bangladesh’s economy has maintained a healthy 6%-plus plus growth rate in past years and significantly reduced the number of absolute poor. 
• Bangladesh now needs to accelerate GDP growth to 7.5% to 8% and sustain 8% remittance growth to reach its aspiration of middle-income country status by next decade. 
• The distribution of economic opportunities across all population groups, and particularly those at the bottom, needs to improve in order to make middle-income country status meaningful.

World Bank link on the report.

State of Governance in the banking sector

Centre for Policy Dialogue (CPD) published a paper 'State of Governance in the Banking Sector: Dealing with the Recent Shocks', focusing on the challenges confronting by the banking sector of Bangladesh, especially by the State-owned commercial banks (SCBs) in view of the recent Hall Mark scandal. The paper also judges the credibility of SCBs and provides relevant recommendations.

Here is the link of the paper.
Link of the seminar news on the paper. 

Chief Economist, BB

Bangladesh Bank has appointed Dr. Hassan Zaman as the Chief Economist, who was Economic Adviser to the Governor since August 2011 and later promoted to Senior Economic Adviser to the Governor.

A short profile of the Chief Economist.