B Mirror Report:Policy Research Institute of Bangladesh (PRI), in collaboration with the Department of Foreign Affairs and Trade, organized a discussion titled “Monthly Macroeconomic Insights: Global Turbulences and a Rise in External Sector Vulnerabilities” in Dhaka on Sunday.

The keynote presentation was delivered by Dr. Ashikur Rahman, Principal Economist of PRI, who said global turbulence is creating serious headwinds for the economy. He noted that Bangladesh has been navigating an exceptionally challenging global environment over the past six years, beginning with the COVID-19 pandemic, followed by disruptions caused by the Russia–Ukraine War and more recent uncertainties arising from trade tensions and geopolitical conflicts.

Dr. Rahman also pointed out that Bangladesh has experienced significant political transitions in recent years, with three governments within two years, each bringing policy adjustments and institutional changes. As a result, the economy has faced pressure on growth, the external sector and inflation management.

The programme was attended by Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), as the chief guest. In his remarks, he stressed the need for a more flexible exchange rate and further depreciation of the taka to better reflect market conditions.

Hatem said many ready-made garment factories are currently operating at only 50–60 percent capacity, with several incurring losses every month. He also noted that exports have been declining for the past seven months and may continue to decline until June.

Emphasizing urgent reforms, he called for a clear roadmap for Bangladesh’s graduation from the Least Developed Country (LDC) category despite the deferment request, along with reforms in tax and regulatory systems to improve competitiveness and simplify compliance.

The session was chaired by Dr. Zaidi Sattar, Chairman of PRI, who warned that global developments are having serious implications for Bangladesh’s external sector and overall economic stability. He said Bangladesh’s request to the United Nations to defer its LDC graduation has gained stronger justification under the current circumstances.

Dr. Sattar noted that it may not be reasonable for the UN system to insist on immediate graduation simply because Bangladesh has met the criteria, expressing hope that the graduation timeline could be extended by one or two years, similar to the deferment granted during the pandemic.

Discussing trade issues, he said Bangladesh is currently dealing with three major trade arrangements that will shape its economic trajectory, including the pending US–Bangladesh trade arrangement. He also mentioned that a recent ruling by the Supreme Court of the United States removing reciprocal tariffs offered some positive news, though Bangladeshi exports still face a 15 percent tariff in addition to existing Most Favoured Nation (MFN) duties.

The discussion was moderated by Dr. Sadiq Ahmed, Vice Chairman of PRI. In his opening remarks, he said the outlook for investment and GDP growth has improved with the new government in power. However, he noted that higher economic growth would require increased imports and raised the question of how these imports would be financed.

Dr. Ahmed said imports will need to grow by 8–10 percent to support GDP growth of 6–7 percent, while rising debt servicing will require additional financing. He added that remittance growth is likely to stabilize at 5–6 percent, meaning that a double-digit expansion in exports will be crucial to finance future imports.

He emphasized that achieving such export growth will require export diversification, a competitive exchange rate, low inflation, reduced trade protection, improved logistics, increased foreign direct investment (FDI), and stronger skills development.

Dr. Ahmed also noted that export prospects remain uncertain due to several factors, including declining exports to EU markets, the potential impact of the India–EU Free Trade Agreement, tariff uncertainties in the United States, the pending LDC graduation process, and external shocks linked to the Iran conflict.

During the discussion, Dr. M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, said Bangladesh has entered a phase of early macroeconomic stabilization since September 2024 but warned against complacency.

Harry Thompson, First Secretary (Political) at the Australian High Commission in Dhaka, said Bangladesh, like many other countries, is facing growing external vulnerabilities due to ongoing global conflicts.

The event concluded with closing remarks from Dr. Khurshid Akam, Executive Director of PRI.