Views on Commodity Prices

Sohel Parvez from the Daily Star nicely compiled observations of the mass as well as experts on the current phase of higher commodity prices in Bangladesh. Interesting to read! Here are the two links:


1. Inflation: the seen and unseen effects
2. How to ease inflationary pressures


My comments:
Economists mentioned measures including generating employment opportunities for the unemployed, widening safety net programs, and storing food as much as possible for possible market intervention, if necessary. To me, these are all good measures for the low income peoples. What about the measures for middle income and/or fixed income groups of the population?

Surprisingly, everyone talked about short-run measures to tackle inflationary pressures, didn’t mention any long-term solutions such as investment in agriculture infrastructure (and/or agriculture research). How long we are going to live on short-term measures based on government subsidy? 

Provisional GDP estimate of FY2011

Bangladesh Bureau of Statistics released provisional estimates of GDP growth for FY2011 as published in today' Financial Express. So, Overall GDP growth rate in FY2011: 6.66%

It has provided the final estimates of GDP growth for FY2010, which is 6.07%, up from the provisional estimate of 5.82%.

Here is the report.

Non-populist view on Bangladesh Bank’s role?

In this article published in the Daily Star, Mr. Ahsan Mansur suggests the Central Bank, Bangladesh Bank, to be more aggressive in implementing its role to control inflation through monetary tightening. He suggests to take lesson from the respective central banks of China and India on this. A really good article to read (and know a lot).

My comments:

Although significantly higher growth (29.1% in March 2011) of private sector credit is a matter of concern now, yet I am just wondering whether the comparison of the Bangladesh economy with those of India and China is valid because of their differences in the GNI level and GDP growth level. Shouldn’t we compare these economies at least at the similar GNI level because still we are growing by just over 6.0% per annum with this high credit growth? Shouldn’t we consider the credit quality and productivity of credit before commenting grossly on the negative impact of higher credit growth?

Again, as inflation is dominated by food inflation, the questions remains on how much room are left for the monetary instruments to control the overall inflation. As we meet with business leaders as well as bankers, they all talk about the liquidity crisis in the money market. And do we really think that around 11.0% inflation is a real threat for an economy like us? What is the linkage between private sector credit growth (PSCG) and inflation in Bangladesh? For your information:

Fiscal year	PSCG (%)	Inflation (%)	Food inflation (%)
2006	18.1	7.2	7.8
2007	15.0	7.2	8.1
2008	24.9	9.9	12.3
2009	14.6	6.7	7.2
2010	24.2	7.3	8.5
2011 (March)	29.1	8.4	10.7

By suggesting adoption of demand management policies, did we already agree with the notion that the current inflationary period is the reason of demand side problems, rather supply side? Because non-food inflation is on a declining trend ever since the Bangladesh economy is facing higher food inflation. Does it mean that peoples’ demand for food has been increasing over the period because their access to credit (or, their income level) improved (and demand for non-food commodities declines)? Does it suit with the great ‘Engel’s law’?

About the renewed role of the central bank, please read this working paper of BIS.          

Timely piece on inflation

Asjadul Kibria, Deputy Business Editor of Prothom Alo writes mostly on institutional factors of domestic inflation in Bangladesh on today's Daily Star. He talks on some real valid points to argue on the issue and the arguments are timely as well.

Here is the link. 

Inflation time again

So, inflation riding on food prices continues to rise.

Here is the new data from Bangladesh Bureau of Statistics. 

Some news reports based on the above update as well as a study done by Planning Commission on the factors of inflation.

1. The Daily Star
2. The Financial Express

Favorite Economists of Economists

This paper cited in Greg Mankiw's Blog on Economics Professors' Favorite Economic Thinkers, Journals and Blogs is an interesting one to read.

Bangladesh and 44th Annual Meeting of ADB

Dr. Atiur Rahman, Governor of Bangladesh Bank, the central bank of Bangladesh, talked on 'Steady, Resilient Progress on Inclusive, Broad Based Growth Path', a power-point presentation, on behalf of the Bangladesh Government on 44th Annual Meeting of Asian Development Bank (ADB) in Hanoi, Vietnam on 5 May 2011. The presentation analyses the recent development in the Bangladesh economy, its present efforts for further development and, of course, future constraints and challenges in a concrete way. I think, we can use the substance of this presentation when foreigners want to know the economy of  Bangladesh.

BBS and paradox in its inflation data

Dr. Ahsan Mansur rightly points out the paradox in the inflation statistics given by the Bangladesh Bureau of Statistics in his article "Inflation and Statistical Paradox" on today's Financial Express. The article clearly shows the lack of quality, integrity and finally commitment of the respective authority while producing this important statistics of the country.

We must improve this position.

Effect of fuel price hike

The Government recently increased the fuel price marginally by Tk2.0 per litre. Shahiduzzaman Khan from the Financial Express explains why the Bangladesh Petroleum Corporate had to make such a decision at this moment and the immediate impacts of fuel price hike and also the long-term impact. It's a worth reading.

Here is the link.

A related story is here. 

ASIA 2050

Asian Development Bank (ADB) publishes a new book 'ASIA 2050: Realizing the Asian Century' which includes, among other issues, the historical dominance of Asia in World Economy and decline in 17th and 18th Century, and the re-emergence of Asia in late 20th century. It then critically analyses the main drivers of Asian Century, its future until 2050 and challenges and risks. Finally, it provides a strategic framework for Asian Century to be fulfilled considering inclusion and equity perspectives, financial transformation, energy intensity and ensuring security and so many issues.

Hope you all will like it. :-)

Record Import Spending

Recent robust growth (40.6% during July-March FY2011) in import spending made a situation that now Bangladesh is able to pay around 3.5 months of its import payments with its current foreign reserves (US$11.1 billion on May 3) despite the fact that export growth was also significant. Import payments has been rising due to higher food and petroleum prices at the international market, higher petroleum imports for diesel-based power plants and higher capital machinery imports because of rebound foreign demand for Bangladeshi products. Foreign reserves are under pressure not only due to higher import payments, but also lower growth in remittance inflows.

Here is the news. 

Bangladesh Economic Update, World Bank

The World Bank -Dhaka Office publishes its regular economic bulletin on Bangladesh economy "Bangladesh Economic Update April 2011" focusing growth projection for FY2011 as well as FY2012, and reforms in various sectors. A special section 'Food inflation in Bangladesh' has incorporated, tried to reason international commodity prices for higher domestic commodity prices.

Regional Economic Outlook, IMF

IMF publishes its 'Asia and Pacific Regional Economic Outlook' "Managing the Next Phase of Growth" with reference of Bangladesh on related issues such as monetary tightening, export and remittance growth. You may find this useful.