Professional Documents
Culture Documents
Prepared by:
Safat Mosharraf
ID: 141 1709 660
Course: BUS530 (section 2)
Contents
TABLE OF CONTENT
1.
2. Overall findings.................................................................................................... 10
Inflation
Exchange rate
GDP growth rate
Remittance
1.1 Inflation:
In economics, inflation is a rise in the general level of prices of goods and services in an
economy over a period of time. The government revised the base year for calculating inflation
rates to 2005-2006 from 1995-1996 at July 2012, to introduce a more representative index of
wholesale prices in the changing structure of the economy.
1.1.1 Inflation rate in Bangladesh in the year 2013 (October-December)
under base year 2005-2006
November
December
October 2013:
October 2013: Average inflation rose by 0.17 percentage points to 7.30 percent in October from
the previous month on the back of rising food prices. The general point-to-point inflation rate
soars further in November with both the food and non-food items showing a rising trend as it
notched 7.15 percent up from 7.03 percent in October this year.
November 2013: The country's point-to-point inflation rate soars further in November with both
the food and non-food items showing a rising trend as it notched 7.15 percent up from 7.03
percent in October this year. The average point-to-point inflation rate in November stood at 7.15
percent which was 7.03 percent in October; The BBS figures showed that as per the 2005-06
base years, the food inflation in November this year rose to 8.55 percent, up from 8.38 percent in
October. On the other hand, the non-food inflation rate also increased to 5.08 percent in this
November rising from 5.02 percent in October.
December 2013: As per the 2005-06 base years, the general point-to-point inflation rate in
December was 7.35 percent. The BBS figures showed the food inflation rate in this December
slightly increased to 9.00 percent from 8.55 percent
In short,
October 2013: inflation rate: 7.03%, food inflation: 8.38%, non-food inflation: 5.02%
November 2013: inflation rate: 7.15%, food inflation: 8.55%, non-food inflation: 5.08%
December 2013: inflation rate: 7.35%, food inflation: 9.00%, non-food inflation: 5.53%
1.1.2 Inflation rate in Bangladesh in 2012 under the base year 1995-96:
October 2012: The point to point inflation was 7.22 percent in October. The food inflation was
5.57 percent while the non-food inflation was 10.46 percent.
November 2012: The point to point inflation was 7.41 percent in November. The food inflation
was 6.45 percent while the non-food inflation was 9.31 percent.
December 2012: The point to point inflation was 7.14 percent in December. The food inflation
was 7.33 percent while the non-food inflation was 9.3% percent.
1.1.3 Comparative analysis of inflation rate between the reference period of
2012 and 2013:
In 2012, Eid spending push the inflation (p to p) up in November 2012, first time in
Nine months. Inflation was little high compared to 2013. While overall inflation
remained high, the rapid rise in non-food inflation posed a major policy challenge.
Inflationary pressures intensified due to the lagged effects of rapid growth in money and
credit. The sharp taka depreciation resulting from continued high import demand has
contributed to price pressures.
In contrast, 2013 inflation rate was little bit better and moderate than the reference year 2012.
The main reasons are:
Inflation declined in the recent period because of the decline in food and non-food prices.
Changing consumption pattern and demographics.
October
Novemb
er
Month
Month
Avg.
end
2013-14(taka per
USD)
77.85
77.82
77.83
77.69
Month
Month
Avg
end
2012-13(Taka per
USD)
81.3123
81.2005
81.454
81.3811
The gross domestic product (GDP) is one the primary indicators used to gauge the health of a
country's economy. The monetary value of all the finished goods and services produced within a
country's borders in a specific time period, though GDP is usually calculated on an annual basis.
It includes all of private and public consumption, government outlays, investments and exports
less imports that occur within a boundary.
1.3.1 GDP growth rate for 2012
GDP growth in 2012 was lower than the previous year. GDP growth in FY2012 decelerated to
6.1% with lower export growth, compounded by weaker domestic demand. The external
environment for the Bangladesh economy continued to be challenging, with the euro zone
experiencing a prolonged period of debt adjustments and recovery of the United States (US)
economy remained weak. Growth of industry was lower, because of weakening domestic and
external demand conditions.
1.3.2 Estimated growth rate of GDP for 2013
In contrast, The Asian Development Bank (ADB) in its outlook has forecast Bangladesh's gross
domestic product (GDP) growth in 2013 'softer' than in the 2012 as it faces political transition.
As of December 31, 2013, ADB assistance to Bangladesh amounted at over $900 million a year having 58 ongoing loans with a net loan amount of $5.19 billion. As one of the lead development
partners in energy, transport, water supply and sanitation, education and natural resources
sectors, ADB's cumulative lending to Bangladesh amounts to $15.13 billion for 246 loans, while
the technical assistance includes 432 projects amounting to $238.19 million.
GDP growth in FY2013 is expected to be lower than the previous years 6.3%, because of
continued weak external and domestic demand. Export growth is unlikely to pick up because of
fragile consumer confidence in euro zone countries and modest recovery in the United States
(US). Domestic demand is subdued because of low consumer and investor confidence, slower
growth in agricultural income because of lower rice price, and slowdown in real estate and
construction activities. Declines in capital machinery and industrial raw material imports also
indicate sluggish economic activity in the coming months. In addition, supply side constraints,
mainly electricity and gas shortages, will hold down short-term growth prospects. Economic
growth will also be affected by continued political unrest.
Capital goods import was 36.21 billion during December of FY2013 compared with the same
period of the previous year. Bangladesh received net FDI to the tune of US$ 806.52 million.
Statistics shows that Bangladesh received $1.29 billion inward FDI in 2012.
Fiscal deficit is contained within the budget target as annual development program (ADP)
implementation remains below target, current spending held in check because of periodic
adjustments in administered power and fuel prices, and moderate rise in revenue.
Boosting private investment is a priority:
Bangladesh needs to quickly address its key development challenges. Private investment needs
to rise. Infrastructure shortages, skills deficiency, and business regulatory environment need to
improve.
Improving business climate is key to boosting private investment. Raising private investment
also requires an efficient banking system and a vibrant capital market. In particular, long-term
private infrastructure financing needs higher depth and efficiency of the financial system,
including the bond market. Bangladeshs trade regime also needs to be further liberalized and
existing anti-export biases need to be removed to raise competiveness. Trade logistics needs to
be improved and trade facilitation capacity needs to be strengthened.
1.4 Remittance
The economy of Bangladesh is growing mainly due to foreign remittance. Most of the workers of
Bangladesh migrated abroad are working in the Middle East: Saudi Arabia, UAE, Qatar, Oman,
Bahrain and many other countries. There is hardly a country where Bangladeshi workers are not
present. The growth in remittances, the second biggest foreign currency earning sector after
exports, give a much needed cushion to the government to face a rising pressure on the countrys
balance of payments.
The inward remittances received from Bangladeshi nationals working abroad remained strong in
July-January 2012-13 and continued to play an important role in strengthening the foreign
exchange reserves and current account, according to Bangladesh Bank. The remittance rose by
19.74 percent or US$ 1439.06 million to US$ 8728.77 million in July-January 2012-13 from
US$ 7289.71 million in July-January 2011-12. Meanwhile, remittances increased by 8.64 percent
or US$ 105.58 million in January 2013 to US$ 1326.99 million from US$ 1221.41 million in
January 2012 and 3.08 percent or US$ 39.68 million from US$1287.31 million in December
2012. In January 2013, US$ 371.04 million remittance were received from Saudi Arabia, US$
250.76 million from the United Arab Emirates, US$ 171.10 million from U.S.A., US$ 103.40
million from Kuwait, US$ 92.67 million from Malaysia, US$ 90.42 million from U.K., US$
53.97 million from Oman, US$ 47.93 million from Singapore and US$ 145.70 from other
countries.
In FY 2012-13 (During July to October), the rate of growth on remittance was 24.75 percent
which was 11.99 percent in FY 2011-12.
1.4.1 Remittance in October-December 2013
Month
In billion US dollars
In billion taka
October
18.542
1437.005
November
2.062
159.805
December
22.5
1743.75
In billion US dollars
In billion taka
October
17.499
1420.9188
November
1.918
155.7416
December
21.391
1736.9492
2. Overall findings
Inflation rate was much lower in the October - December period of 2013 than the
References
http://www.dhakatribune.com/economy/2013/jul/03/remittance-inflow-breaks-record
http://www.mccibd.org/pdf/march2013/Bangladesh_News.pdf
http://www.philstar.com/business/2014/01/12/1277761/remittances-seen-record-high-
anew-nov
http://www.bangladesh-bank.org/pub/special/jan132013fininclcmp.pdf
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http://en.wikipedia.org/wiki/Macroeconomics
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