Sectors recovering at varying paces: MCCI
Although the country's financial activities gained pace following the coronavirus containment methods came to an end on May 30, it really is still far off from ordinary levels, a respected chamber said in an assessment.
"The speed with which various business activities have found varies from sector to sector according to the demand for goods and solutions," the Metropolitan Chamber of Commerce and Sector (MCCI) said in its review of the economic circumstances in Bangladesh between July-September 2020.
During the quarter under analyze, the gradual grow of energy, petroleum and gas usage indicates that the overall economy is time for normalcy.
A big segment of informal industries, services and alternative activities have also resumed businesses but they seem to be to be running at a much lower level than their full capacities.
For example, the export-oriented garment and leather industries alongside the domestic metal, food-processing and transfer sectors are not running at full quickness yet.
However, the positive adjustments must be interpreted carefully.
"Private investors want to cope with the problem instead of making further investments however the good thing is that economic actions will be increasing gradually," the report explained.
Bangladesh is currently confronting some major issues in steering its economy to a higher progress trajectory, the MCCI added.
These challenges include sluggish implementation of development projects, low investment and sluggish growth of income.
Therefore, a significant increase in public and private investment is necessary to keep up competitiveness and generate even more growth.
Concerning agriculture, the MCCI stated that the government rolled away a refinance scheme of Tk 5,000 crore to greatly help the sector tackle the economic losses incurred by Covid-19 for a great 18-month tenure, with a 6-month grace period.
In line with the latest Bangladesh Bank data, as much as 43 banking institutions signed participation agreements with the central bank to disburse the fund.
However, only a tiny number of loan providers have so far made disbursements and by September 2020, only Tk 1,892 crore, or 37.84 %, of the total amount was provided as loans to around 78,526 farmers.
In the broad industry sector, the manufacturing sub-sector recorded a low growth of 5.84 % in FY20 compared to the past fiscal, when it was 14.20 %.
Within manufacturing, the large and moderate scale industries' sub-sector performed similarly worse than it had in the last fiscal, growing 5.47 % in FY20 following 14.84 per cent in FY19.
The small-scale manufacturing industries likewise witnessed a stunted growth rate of 7.78 per cent in FY20 against 10.95 % in FY19.
On the other hand, to overcome the possible Covid-19 impacts about the sector, the government rolled away a bail-out package of Tk 30,000 crore in April to supply working capital for afflicted sectors and service sector organisations at a low interest rate.
Accordingly, on April 12, the central bank launched the stimulus package and as of September 17, some 2,062 large companies received low-cost loans totalling Tk 25,461 crore, or 84.87 % of the package.
Bangladesh Bank down the road formed a Tk 5,000 crore pre-shipment credit refinance scheme for area items and the export sector.
But despite the scheme, export-oriented sectors have not manufactured any improvement, the MCCI said.
The scheme was issued on April 13 but only Tk 16.6 crore, or 0.33 %, had been disbursed by September 30.
But on August 24, the central lender relaxed the rules for availing the pre-shipment credit rating refinance scheme with a great aim to help community exporters continue shipping items.
The tenure was also extended from the previous four-month timeframe to 2 yrs.
Meanwhile, many service sectors, sans education, have previously resumed their actions amid the current crisis and also have contributed to the country's monetary recovery.
According to the trade body, among all pieces of domestic credit, private sector credit growth stood at 9.48 % between September 2019 and September 2020 although it was 10.66 % during the same period for 2018-19.
Meanwhile, public sector credit growth was 32.04 per cent at the end of September 2020 in comparison to an increased growth of 44.40 per cent towards the end of September 2019.
Export earnings found in the July-September period of FY21 increased by 2.58 % to $9.90 billion from $9.65 billion in the corresponding quarter of the previous fiscal.
The entire export growth in July-September of FY21 was generally driven by the garments sector, which alone fetched $8.13 billion, or 82.12 %, of the full total exports.
Good government's efforts to tackle the Covid-19 fallout, Bangladesh Lender has elevated the export development fund (EDF) to $5 billion from $3.5 billion.
By September 30, 2020, about $2.99 billion or 59.80 % was distributed among 2,202 applicants.
In the first 90 days of the existing fiscal, the net foreign direct investment (FDI) decreased by 60 % to $68 million from $170 million in the corresponding three months of FY20, in line with the central bank's balance of obligations data.
Alternatively, the gross inflow of FDIs during the period under evaluate also decreased by 24.69 % to $540 million from $717 million in the corresponding 90 days of FY20.
FDI inflow to Bangladesh is low in comparison to that of several countries at similar level of expansion, the MCCI said on its review.
