*** ''But one frustrating issue works here that this year the export of leather goods might not grow at the same space as in July due to the shift of factories from Hazaribagh to Savar. Of the 155 relocated leather factories, the majority could not start their production due to a lack of gas connection.'' ***
New financial year just sets out its stepping, and in the meantime we are getting some hints of hope and no hope of the economy. Hope overruns no hope as exports have bounced back in July. It's a big news of hope raising, thanks to Export Promotion Bureau (EPB) that after a lacklustre performance in the previous fiscal exports are turning round. Information said, export earnings in July soared 26.54 per cent to USD 3.2 billion making a strong rebound. July's receipts, however narrowly missed the monthly target of USD 3.23 billion. The surge in exports was led by garment whose shipments soared 17.08 per cent year on year to USD 2.47 billion in July. Still the sector's export earnings fell short of the monthly target by 5 per cent. It is true last month earnings growth might not sustain all the year round. As garments contribute 78 to 80 per cent to our total export earnings, so its welcome beginning reminds us that "morning shows the day". Yet challenging factors for this sector are lively there. The other competing countries are performing well because of their efficiency of port operations and for having better infrastructure. Bangladesh's garment exports to the European Union grew only 3.49 per cent to USD 17.75 billion in fiscal 2016-17.
In the case of US, the country's single largest export destination, it declined 7.47 per cent to USD 5.2 billion. Yet we are hopeful with our finance minister as he hoped in his budget speech that the impact of external demand on GDP growth is ever increasing. Different strategies included in the trade policy together with continuing incentives to exporters will have a catalytic impact on increasing external demand. We wait to see. Last month, leather and leather goods exports grew 26.19 per cent year on year to USD 116.73 million. Media source says, exporters are expecting the surge in shipments to Christmas, the preparation of which starts from July and wraps up in the middle of September. From September onwards, the retailers start stocking the products on their shop floors. But one frustrating issue works here that this year the export of leather goods might not grow at the same space as in July due to the shift of factories from Hazaribagh to Savar. Of the 155 relocated leather factories, the majority could not start their production due to a lack of gas connection. Frozen and live fish exports grew 57 per cent to USD 59.42 million, pharmaceuticals 23.29 per cent to USD 7.20 million, home textile 60.31 per cent to USD 63.77 million and footwear 84.08 per cent to USD 25.20 million. However, the earning from the promising jute and jute products slide 7.51 per cent to USD 64.53 million. Capital machinery import surges 37 per cent showing sign of production boost. The country's overall imports grew by more than 10 per cent in the last fiscal. The higher imports particularly in the energy and power sector mainly contributed to the rise in overall capital machinery imports. Imports may rise further due to rising trend of food grain import. Inflation declined for the first time in eight months in July due to a fall in prices of both food and non-food items. A national daily reports, last month the consumer price index fell 0.37 percentage points to 5.57 per cent from a month earlier. This is a surprise to a number of economists. Since given the rise in rice price and the devaluation of the taka against dollar which makes imports costlier. So economists apprehend inflation would go up. Because in Bangladesh rice a staple food item plays an important role in determining inflation. Non-food inflation declined 14 basis points to 3.53 per cent in July, which was 3.67 per cent a month earlier. Post- Ramadan slowdown in consumer demand is likely to have contributed to the decline in non-food inflation. In this context the budget forecast that, As the retail price of gasoline and other energy related products has gone up, inflation in developed and most of the developing countries will increase in 2017. Consumer Price Index (CPI) inflation in developed countries is likely to rise to 2.0 per cent in 2017 compared to 0.8 per cent in 2016. At the same time, CPI inflation in the emerging and developing countries is projected to increase to 4.7 per cent from 4.4 per cent. But another area of discomfort is the declining state of remittance. In addition to Middle-East, US, UK and Singapore are also main sources of our remittance. In legal way, inflow of remittance has been declining. In fact, most of the developing countries in the World except some Latin American and Caribbean countries have experienced decline in remittance inflows during the last consecutive years. Due to low oil prices and contractionary fiscal policies adopted by some governments, remittance inflow to South Asia has decreased notably. Furthermore, weak growth in countries of Europe and Russian Federation, deflation of Euro, adoption of anti- immigration policies by many countries, various hindrances in remittance transfer, relative benefits of remitting money through informal channels and controlled exchange rate policy of many countries have negatively impacted the remittance inflow. This is our budget analysis. Another view indicates, remittance inflow is not sliding. It is coming through informal way to avoid hassle of formal ways which are remaining unaccounted. That through "Hundi", our repatriates are sending their money. High value of dollar against Taka is one of the causes that compels Bangalees to take informal ways. According to budget speech, families of Bangladeshi expatriate received TK 3.02 lakh on an average in 2015. 25 per cent of this remittance was invested in different sectors. Considering its importance in economic development of the country, government has undertaken different measures to increase remittances. Some of the important steps include reducing cost of remittance transfer, improving drawing arrangement between Bangladeshi banks and the local banks of the countries where expatriates are working and motivating the workers to remit through "Probashi Kallyan Bank". There is a ray of hope in the projections of international organizations that global remittance inflows to developing countries will likely recover in 2017 and achieve 2 per cent growth. Our finance minister firmly believes that all these initiates together with increasing trend of global growth will have positive impact on our remittance inflows (Budget speech for 2017-18). We have to wait to see. But at present the declining trend will weaken the expectation of external resource inflows.
