The second half of the year will be quite interesting with economic activities at an all-time high
Bangladesh is going to celebrate the golden jubilee of its independence in 2021. The nation has once again shown its indomitable nature during Covid-19 registering GDP growth over 5% in 2020 – the highest among major economies.
In 2021 it is expected that the economy will receive further momentum with the Covid outbreak easing out. But that comes with certain risks and fresh apprehensions. While the progress in the discovery and production of vaccine against Covid rejuvenated us, the outbreak of new variant of virus especially in Europe poses new threat to global health and consequently to the recovery of the global economy.
Especially, our RMG export may receive a fresh dent in the first half of the year and is expected to bump up only from the third quarter of the year. The government's revenue collection is likely to fall short of the target, resulting in higher government borrowing. This is not bad when private sector credit growth remains behind the desired level.
However, to keep the edging up inflationary pressure at bay, the government needs to focus on expediting the implementation of large public sector projects and keeping enough reserve of food stocks.
Private sector investment is likely to receive momentum in the second half of the year, so is private sector growth. With the restrictions relaxed, there will be a surge in international travel both for vacation and medical reason. This coupled with higher import payments will see a slight depletion of foreign reserve in the second half of the year.
Overall, the second half of the year will be quite interesting with economic activities at an all-time high. The key challenge to avoid a K-shaped recovery will be to recover the lost jobs by channeling enough financial resources to cottage, micro and small enterprises, and the marginal population. With that accomplishment, the country will be well poised to celebrate its golden jubilee of independence with a very high note in December.
Mominul Islam, is the Managing Director & CEO of IPDC Finance Limited