Bangladesh (Commonwealth) _Several business and corporate executives have warned that businesses in Bangladesh would have difficulty handling the effects of greater inflation and exchange rates in 2024, and that operating and manufacturing costs may rise due to rising bank interest.
Nonetheless, if the incoming administration implements timely steps to patch up the economy’s holes, they forecast that things may get a little better in the second part of the year. “In 2024, the primary challenges will be controlling inflation and maintaining currency stability,” stated Asif Ibrahim, vice-chairman of Newage Group of Industries, a leading exporter.
For many corporations and enterprises, the last year was filled with uncertainty as exporters battled to keep prices competitive with those of other nations while importers suffered greatly due to the lack of foreign exchange.
As the government and central bank intervened to halt the decline in the level of foreign exchange reserves, imports fell precipitously. This had an effect on the acquisition of capital equipment and industrial raw materials from global marketplaces.
Mamun Rashid, managing partner of PwC Bangladesh, stated that new investors were hindered by the liquidity shortage and that foreign investors had trouble repatriating gains. The former banker claimed that because of the increased dollar rate, which drove remitters to unofficial platforms, only 50–60% of the potential remittance pie was seen through legitimate channels.
The non-realization of revenues made headlines throughout the year, but exporters maintained overall buoyancy despite minor market dips, he said, adding that inflationary pressure has put middle-class and lower-class people under stress all year long.
Geopolitics, according to Md. Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, will have a role in business decisions in 2024. His concern is about the ongoing threat that the Russia-Ukraine war poses to Bangladesh and the world economy.
Furthermore, he stated that in order for companies to survive the current crisis, policy assistance is necessary and political stability in Bangladesh is crucial. The Dhaka Chamber of Commerce and Industry’s president, Ashraf Ahmed, is more upbeat about 2024.
He stated that recuperating from the 2023 events and locating capital for expansion will be the main issues facing the coming year. However, we anticipate that the difficulties with foreign exchange will get better. Businesses should have considerably better luck in 2024 as the macroeconomic conditions both domestically and internationally might improve, inflation could drop, and fears of a worldwide recession should lessen.
Ahmed said that 2023 served as a helpful reminder to always remember the principles of risk management, interest rates, and exchange rates.
Since the start of the conflict between Russia and Ukraine, we have had a number of difficulties, according to Selim RF Hussain, head of the Association of Bankers, Bangladesh. This level of macroeconomic volatility has not previously been observed. Similarly, we have not observed any difficulties in maintaining the balance of payments.
BRAC Bank, managing director believes that although the situation was addressed by the policymakers, the results were not ideal and many issues were brought about by the limitations, especially those pertaining to interest rates.
2024, he predicts, will be a challenging year. Five to six banks are in worse shape than they were a year ago, and action must be made to prevent issues inside these institutions from getting worse and becoming systemic.
According to Hussain, powerful individuals have a lot of influence in the banking industry. We need to go over it. Numerous adjustments are required in the banking industry. Recovering bad debts also requires reforms. According to him, geopolitical tensions and the possibility of a bigger conflict in the Middle East are the reasons for global difficulties.
The West, where Bangladesh mostly exports, has high interest rates at the moment. Challenges might arise for the export industry. According to Unilever Bangladesh Ltd.’s chairman and managing director, Md. Zaved Akhtar, Bangladesh is anticipated to transition to a more elevated inflation regime by 2024.
As a result, the nation must retain a solid base of purchasing power, balance currency adjustments while containing any potential for inflation, and strengthen financial account management. All of these will guarantee the long-term prosperity of our nation and enterprises.
The currency crisis and high import costs made the previous year difficult for business, according to Ahsan Khan Chowdhury, chairman and CEO of Pran-RFL Group. According to him, companies may get some relief from the strain as a new administration is anticipated to implement currency reforms.
