Size of the shadow economy in Bangladesh!

A report from the Transparency International Bangladesh (TIB) reveals that, on average, the size of shadow economy is about 24% of GDP in Bangladesh.

1. Summary of the report
2. Related news on the report

Historic plunge in stock prices!

News on the Stock Market crash (DSE suffers a historic 600-pt fall within a day) in Bangladesh!


1. The Financial Express
2. The Daily Star
3. New Age

Off the mark: diversification that is not

Another good piece from Professor M.A.Taslim on various ways to export expansion!

Food inflation hurting :(

Food inflation in Bangladesh (also around the world) has been increasing over the couple of months. It became unstoppable despite various government steps. Government has to increase its subsidy for the poor and also need to take steps to control overall food price escalation through checking domestic factors .

1. A related news comments!  

2. An editorial from the Financial Express, January 10, 2011.

Harsh news from remittance front!

This report compiles some alarming news on remittance inflows into Bangladesh.

A few numbers are noted:

1. Bangladesh's labour export, the country's second biggest source of foreign exchange, has fallen by about 18.0% in 2010;
2. A total of 385,000 Bangladesh workers went abroad in 2010, against 475,000 in 2009.
3. Kuwait, that had 40,000 Bangladeshi workers some years back, recruited only 21 persons in 2010;
4. Remittances have gone up marginally by only 2.6% during 2010;

There is also news on the reaction from private recruiting agencies on the loss of overseas jobs for Bangladeshi workers. 

CPD's view on stock market development

The Centre for Policy Dialogue (CPD) expressed a few interesting (as well as noteworthy) views on the current stock market situation. CPD not only shows flaws in the current system, but also explains the reasons for sudden stock market instability, from the perspectives of both investors and regulators.

Here is the zero draft of the original report of CPD!

Incredible profits by banks in 2010!

Incredible profits by commercial banks in 2010, probably explain the reasons for the booming stock market at the same period. In addition, profit from increasing trade credit in the second half of the year increased with the world economy recovering from the recession. Most banks marked a rise in profit, ranging between 50.0% - 90.0%! 

Source: The Daily Star, 2 January 2010

Here are the news links:
1. The Daily Star
2. The Financial Express

23 IPOs in 2010!

A total of 23 initial public offerings (IPOs) worth around Tk35.0 billion came in the stock market in 2010! Here is the detail.

Happy New Year 2011

Wishing you all a very happy and prosperous new year 2011!

China’s influence on the World economy

IMF’s Vivek Arora and Athanasios Vamvakidis articulately quantified (read the link, please) the implications of China’s growth for the rest of the world, albeit from the aggregate level. Some of the interesting findings are as follows:

• China’s Real GDP has grown by about 10.0% annually, implying a doubling every seven to eight years. The resulting 16-fold increase in a major economy’s national income during a single generation is unprecedented;
• China’s share in world trade has increased ten-fold over the past three decades, to about 9.0%, while its share in world GDP has risen to 13.0% from less than 3.0% (PPP basis);
• Inflows of FDI to China, for example, accounted for 7% of gross world FDI inflows in 2009, compared with just 1.0% in 1980.
• In short and medium term, the results suggest that a 1 percentage point shock to China’s GDP growth is followed by a cumulative response in other countries’ growth of 0.2 percentage point after three years and 0.4 percentage point after five years.  

Introducing Economic Theorist Avinash Dixit

Let me introduce economic theorist Avinash Dixit, his career and works.


Hope you will like the article from Finance and Development, IMF! 

Statement by the IMF Mission to Bangladesh

The statement by an International Monetary Fund (IMF) mission led by Mr. David Cowen visited Dhaka during December 6−15, 2010, conducted the 2010 Article IV consultation discussions.

Summary of economic forecasts in the statement:

Ø      Growth is expected to be slightly above 6.0% in FY2011 on the expectations that ready-made garment exports and investment demand providing a boost although they are also being accompanied by rising import growth and slowing remittance flows.

Ø      Inflation is expected to average 7.0% in FY2011, on an anticipated moderation of commodity price increases.

Ø      Following several years of a widening current account surplus, it is likely to narrow significantly to around ½% of GDP in FY2011, compared to 3¾% in FY2010. While exports should remain strong, imports are rising sharply this year due mainly to higher food, fuel, and cotton prices, with oil import volumes also growing rapidly as Bangladesh addresses its power deficit.

Ø      Remittances are expected to fall on a year-on-year basis in FY2011 mainly due to an ongoing decline in migrant worker outflows, adding pressure on the BOP.

Ø      Overall budget deficit is likely to increase by about ¾ percentage points of GDP to around 4 percent of GDP in FY2011.

China opportunity for Bangladesh!

A timely and solid analysis by Dr. Zaidi Sattar published in the Financial Express on a new window of export opportunities opened for Bangladesh because of the fast erosion in China’s global competitive advantage of abundant, cheap and productive labor.

Global recovery has fueled up huge demand for Chinese exports. However, internal developments in China such as rapid wage rises, and acute labor shortages made it impossible for it to remain as a competitive destination in terms of labor costs. Moreover, if global pressures on China to reduce its huge trade surplus against developed economies including the US through appreciating yuan from its alleged under-valuation become successful, will also make Chinese exports dearer and therefore less competitive in the world market. The erosion of Chinese cost competitiveness in labor-intensive products will drive investors for reallocating their investments to the next best location. Bangladesh may become as one of those destinations by a large improvement in ports, customs and safety and labor standards.

Impact of housing finance on Bangladesh economy

An introductory analysis, though not depth, on the development of housing finance and its impact on socio-economy of Bangladesh by Khandaker Khalidur Rahman, is here in this Bank for International Settlements (BIS) paper. Interesting one!

ADB's update on Bangladesh Economy

ADB released its regular Bangladesh Quarterly Economic Update (September 2010 issue). The highlights of the update are as follows:

• GDP growth of 5.8% in FY2010 is respectable considering the continued effects of the global recession;
• Higher growth in FY2011 is expected if the current trend of export growth is sustained and the domestic economy performs strongly;
• Infrastructure shortages need to be quickly addressed and labor productivity increased to enhance growth prospects;
• Sharp slowdown in remittance growth is a concern and could affect GDP growth by depressing domestic demand;
• Food prices are rising causing hardships for the poor, especially in rural areas;
• High growth in broad money and private sector credit is fuelling inflation;
• Revenue performance has been steadily improving;
• Export and import growth were strong during the first quarter of FY2011.