Economy
Sri Lanka thanks Bangladesh for timely assistance on road to recovery
Sri Lankan President Ranil Wickremesinghe has conveyed Sri Lanka's gratitude to the Bangladesh government and Prime Minister Sheikh Hasina for the timely assistance as the country battles to rebuild its economy.
Foreign Minister AK Abdul Momen is now in Sri Lanka as a guest for the country's low-key 75th Independence Day celebrations, for which the guest list was filled up mostly by neighbouring countries at foreign ministry-level.
Momen, along with the others, attended the "Independence Parade" featuring march-past, fly-by, and parachute display by the joint forces at the Galle Face Green, Colombo Saturday.
The foreign minister later paid a courtesy call on President Wickremesinghe at the Presidential Secretariat. It was then that Wickremesinghe conveyed the Sri Lanka people's gratitude to their neighbours in Bangladesh.
World Bank: Myanmar economy to grow 3%, dragged by conflict
Myanmar’s economy grew 3% last year and will likely achieve the same pace in 2023, but still lags far behind where it stood before the army seized power in early 2021, the World Bank said in a report released Monday.
The global development agency estimates Myanmar’s level of economic activity is still more than 10% below where it stood before the pandemic and the military takeover. On a per capita basis it is even further behind, it says.
If the global economy slows further as expected, exports and investment may weaken after recovering somewhat from the pandemic and the disruptions caused by civil conflict and foreign sanctions after the army ousted Aung San Suu Kyi's elected government.
The reversion to military control after nearly a decade of quasi-civilian rule provoked mass protests that spun into armed revolt, on top of decades-long conflict between the government and armed ethnic groups.
“Economic activity has continued to be disrupted by persistent conflict, which has had devastating impacts on lives and livelihoods, and by electricity shortages," the report said.
Myanmar’s economy contracted by about 18% in 2021, after growing at a pace of 6% or more in the years before. The slow pace of expansion last year, from a very low base, suggests conditions remain weak.
“What’s surprising is that the growth hasn’t been higher,” Kim Alan Edwards, a World Bank senior economist, said in an online briefing. “Growth is nowhere near levels we saw in 2019.”
Like other emerging economies, Myanmar has had to contend with a weakening of its currency against the dollar. The kyat's value dropped by about a quarter in June-December last year and has less than half the value it had two years earlier. That makes imports of vital commodities like oil much more expensive in local terms.
Combined with higher prices for many commodities including oil and gas, Myanmar has seen inflation hit nearly 20% as of July, the report said.
Read more: Myanmar opium cultivation surged 33% amid violence, UN finds
“While the kyat has stabilized in recent months, foreign currency shortages persist, which together with onerous trade restrictions have affected businesses’ ability to supply of a range of imported products," it said.
The World Bank economists said controls imposed by the central bank to support the kyat and protect foreign exchange reserves have been relaxed, making it easier for exporters to obtain credit or retain their earnings. But many businesses and people are forced to comply with orders to convert foreign currency into kyat at the official rate of 2,100 kyats per dollar, when the market value is about 2,800 kyats.
The report says agriculture and garment manufacturing have recovered and some businesses are finding ways to operate by using informal payments and trade channels. The reopening of Myanmar's trade routes with China also has helped.
But risks have been heightened by security issues, due to the civil conflict, that add to costs and delays for transporting goods.
“There are no easy fixes to Myanmar's situation," Edwards said, noting a lack of transparency that obscures what is going on. “Rules and regulations can change anytime and can favor some and not others."
Bangladesh, Nepal ties expanded into all areas in last 50 years: Ambassador Ghanshyam
Nepalese Ambassador to Bangladesh Ghanshyam Bhandari on Friday said the friendly relations between Bangladesh and Nepal expanded into all areas – including economy, communication, trade, education, and culture – after the establishment of diplomatic ties between the countries on April 8, 1972.
He was speaking at an art competition organised by the Embassy of Nepal in Dhaka, Bangladesh-Nepal Friendship Society and Bangladesh Book Club at the Central Shaheed Minar the capital to mark the 50 years of Bangladesh-Nepal diplomatic ties.
Read more: Dhaka, Kathmandu seek enhanced ties for mutual gains
Speaking as chief guest at the event, State Minister for Cultural Affairs KM Khalid said there are a lot of similarities between the cultures of Bangladesh and Nepal.
"Also, after India and Bhutan, Nepal became the seventh country to recognise Bangladesh as an independent and sovereign country on January 16, 1972."
Bangladesh’s economy to reach $1 trillion by 2040: Planning Ministry
The size of Bangladesh’s economy will be $1 trillion by 2040, if the current consecutive growth of over 6 percent continues while it will be achieved by 2030 if the growth goes over 8 percent, said an official document of the planning ministry.
The information has also been placed in the updated picture of the economy of Bangladesh presented by the ministry of planning in the meeting of the Executive Committee of the National Economic Council (ECNEC), on Tuesday.
The document stated that the average economic growth of Bangladesh has been 6.4 percent in the last six years. Even if this growth falls below 5 percent, the economy of Bangladesh will touch the milestone of trillion dollars by 2040.
Read more: Social stability now economy’s main challenge: Planning Minister
But if economic growth increases to 8 to 9 percent and internal stability is maintained, it will reach trillion dollars by 2030.
The Canadian online publication Visual Capitalist on December 29 published the statistics of the International Monetary Fund (IMF) showing the size of Bangladesh's economy at $465 billion. Bangladesh was ranked 35th among major economies last year.
US-China officials to meet on economy, aim to ease tension
U.S. Treasury Secretary Janet Yellen sits down with her Chinese counterpart Wednesday in the highest-ranking contact between the two countries since their presidents agreed to look for ways to improve relations that have grown increasingly strained in recent years.
Yellen's first face-to-face meeting with Vice Premier Liu He comes as the U.S. and Chinese economies grapple with differing but intertwined challenges on trade, technology and more.
The Chinese economy is reopening after a COVID-19 resurgence killed tens of thousands of people and shuttered countless businesses. The U.S. is slowly recovering from 40-year high price inflation and is on track to hit its statutory debt ceiling, setting up an expected political showdown between congressional Democrats and Republicans. The debt issue is of keen interest to Asia, as China is the second-largest holder of U.S. debt.
There is also the Russian invasion of Ukraine, which continues to hinder global economic growth — and has prompted the U.S. and its allies to agree on an oil price cap on Russia in retaliation, putting China in a difficult spot as a friend and economic ally of Russia.
And high interest rates globally have increased pressure on debt-burdened nations that owe great sums to China.
Read more: US nears new cooperation deals with Pacific Island nations
“A wrong policy move or a reversal in the positive data and we could see the global economy head into a recession in 2023,” said Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center. “Both countries have a shared interest in avoiding that scenario."
The World Bank reported last week that the global economy will come “ perilously close ” to a recession this year, led by weaker growth in all the world’s top economies — including the U.S. and China. Low-income countries are expected to suffer from any economic downturns of superpowers, the report said.
“High on the list is debt restructuring,” Lipsky said of Wednesday's talks. Several low-income countries are at risk of debt default in 2023 and many of them owe large sums to China.
“Leaders have been trying for two years to get some agreement and avoid a wave of defaults but there’s been little success and one reason is China’s hesitancy. I expect Yellen to press Liu He on this in the meeting,” Lipsky said.
Liu laid out an optimistic vision for the world’s second-largest economy in an address Tuesday at the World Economic Forum in Davos, Switzerland.
“If we work hard enough, we are confident that in 2023, China’s growth will most likely return to its normal trend. The Chinese economy will see a significant improvement,” he said.
After her stop in Switzerland, Yellen will travel to Zambia, Senegal and South Africa this week in what will be the first in a string of visits by Biden administration officials to sub-Saharan Africa during the year.
Zambia is renegotiating its nearly $6 billion debt with China, its biggest creditor. During a closed-door meeting at the Africa Leaders Summit in Washington in December, Yellen and Zambian President Hakainde Hichilema discussed “the need to address debt sustainability and the imperative to conclude a debt treatment for Zambia,” according to Yellen.
The Zurich talks are a follow-up to the November meeting between President Joe Biden and China’s Xi Jinping on the sidelines of the Group of 20 summit in Bali, Indonesia. The two world leaders agreed to empower key senior officials to work on areas of potential cooperation, including tackling climate change and maintaining global financial, health and food stability. Beijing had cut off such contacts with the U.S. in protest of then-House Speaker Nancy Pelosi’s trip to Taiwan in August.
Read more: China greatest security challenge for US: Pentagon
“We’re going to compete vigorously. But I’m not looking for conflict," Biden said at the time.
U.S. Secretary of State Antony Blinken will be traveling to China in early February.
Among economic sticking points, the Biden administration blocked the sale of advanced computer chips to China and is considering a ban on investment in some Chinese tech companies, possibly undermining a key economic goal that Xi set for his country. Statements by the Democratic president that the U.S. would defend Taiwan against a Chinese invasion also have increased tensions.
And while the U.S. Congress is divided on many issues, members of the House agreed last week to further scrutinize Chinese investments.
New House Speaker Kevin McCarthy of California has identified the Communist Party of China as one of two “longterm challenges” for the House, along with the national debt.
“There is bipartisan consensus that the era of trusting Communist China is over,” McCarthy said from the House floor last week when the House voted 365 to 65 — with 146 Democrats joining Republicans — to establish the House Select Committee on China.
Last year, the U.S. Commerce Department added dozens of Chinese high-tech companies, including makers of aviation equipment, chemicals and computer chips, to an export controls blacklist, citing concerns over national security, U.S. interests and human rights. That move prompted the Chinese to file a lawsuit with the World Trade Organization.
Yellen has been critical of China's trade practices and its relationship with Russia, as the two countries have deepened their economic ties since the start of the war in Ukraine. On a July call with Liu, Yellen talked “frankly" about the impact of the Russia’s invasion of Ukraine on the global economy and “unfair, non-market” economic practices, according to a U.S. recap of the call.
Bangladesh's growing economy entices US to maintain good relations: FM
Foreign Minister Dr AK Abdul Momen on Tuesday said the United States wants to maintain good relations with Bangladesh and noted that Bangladesh is "becoming a big economy".
Momen said US Assistant Secretary of State for South and Central Asian Affairs Donald Lu came to Bangladesh to "help improve the relationship" between the two countries.
“We had a very good discussion. We had a very positive and constructive discussion. They are very happy with us. We are also very happy,” he told reporters, adding that President Biden wants to improve relations with Bangladesh in the next 50 years.
Momen said they are also happy with Ambassador Peter Haas because he is an expert on economic issues. “We are on a higher economic trajectory. Our main focus is on economic development. He (Peter) can help us.”
Responding to a question on RAB, he said the elite force is now more mature and things have changed with accountability in place.
Read more: 'Frequent visits' by US officials a good development: Foreign Minister
Momen said Bangladesh is a leader in the world in terms of stopping extremists and terrorists. “We are very successful. There are no terrorism activities.”
He said Bangladesh and the US follow the same values and Bangladesh welcomes any constructive suggestion.
US Embassy spokesperson Jeff Ridenour on Tuesday said Assistant Secretary Lu praised the Bangladesh government for the “dramatic reduction” last year in the number of allegations of extrajudicial killings and enforced disappearances by the RAB.
During his meetings in Dhaka, Assistant Secretary Lu, however, did not indicate a time frame for the removal of RAB sanctions, he said.
Momen said both sides acknowledged the weaknesses during the discussions.
Read more: US envoy meets Momen, shares displeasure over embarrassment
“We, Americans, have our own problems with democracy, but I am proud that our two countries can talk about these issues openly. We will also welcome support for improving our democracy,” Lu said.
China’s economic growth falls to second-lowest level in four decades
China’s economic growth fell to its second-lowest level in at least four decades last year under pressure from anti-virus controls and a real estate slump, but activity is reviving after restrictions that kept millions of people at home and sparked protests were lifted.
The world's No. 2 economy grew by 3% in 2022, less than half of the previous year's 8.1% rate, official data showed Tuesday. That was the second-lowest annual rate since at least the 1970s after 2020, when growth fell to 2.4% at the start of the coronavirus pandemic.
China’s slump has hurt its trading partners by reducing demand for oil, food, consumer goods and other imports. A rebound would be a boost to global suppliers who face a growing risk of recession in Western economies.
Economic growth sank to 2.9% over a year earlier in the three months ending in December from the previous quarter’s 3.9%, the National Bureau of Statistics reported.
Read more: China economy recovering but hampered by virus outbreaks
Consumer spending started to recover but still was weak in December after the ruling Communist Party abruptly ended its “zero-COVID” controls.
China’s economic growth is in long-term decline after hitting a peak of 14.2% in 2007, hampered by hurdles including an aging, shrinking workforce and growing curbs on Chinese access to Western technology due to security concerns.
China’s population of working age people 16 to 59 has fallen by about 5% from its 2011 peak to 876.6 million last year, based on official data released Tuesday. The working-age group as a share of the population of 1.4 billion fell to 62% from 70% a decade ago.
The International Monetary Fund and private sector forecasters expect economic growth no higher than about 4% through the rest of the decade.
In December, retail sales fell 1.8% from a year earlier, but that was an improvement over the previous month's 5.9% contraction. Wary consumers are returning only gradually to shopping malls and restaurants amid a surge in COVID-19 infections that has flooded hospitals with patients.
Investment in factories, real estate and other fixed assets in December rebounded to 0.5% growth over the previous month following November's 0.5% contraction.
“The good news is that there are now signs of stabilization,” said Louise Loo of Oxford Economics in a report.
Read more: China's trade surplus swells to $877.6B as exports grow
Growth is forecast to improve this year to a still-modest level of about 5%. Economists point to weakness in real estate, an important economic engine, and slowing exports.
Factory output in 2022 rose 3.6% over the previous year, suggesting activity tumbled after hitting 4.8% in the third quarter of the year as U.S. and European demand for Chinese goods weakened under pressure from interest rate hikes to cool record-setting inflation.
The surprise end of some of the world's most pervasive anti-virus controls followed a promise by the Communist Party in November to reduce the cost and disruptions of “zero COVID.”
That policy aimed to isolate every sick person. It helped keep China's infection numbers below those of most other countries. But it shut down Shanghai and other cities for up to two months in early 2020 to fight outbreaks, disrupting manufacturing and trade. Growth tumbled to a low point of 0.4% over a year earlier in April-June before rebounding to 3.9% in the following quarter.
A new infection wave that began in October prompted authorities to reimpose restrictions that closed factories and required millions of people to stay home. Public frustration boiled over into protests in Shanghai and other cities. Some protesters in Shanghai called for Chinese leader Xi Jinping to resign.
The ruling party has dropped quarantine, testing and other restrictions and eased controls that blocked most travel into and out of China. It has yet to say when large-scale tourism into the country will resume.
Even after those controls were relaxed, some factories and restaurants were forced to close for weeks at a time in December due to lack of employees who weren't infected.
To shore up the economy, the ruling party has backtracked on key financial and industrial policies, winding down anti-monopoly and data crackdowns aimed at tightening control over China’s tech industries. That campaign wiped hundreds of billions of dollars off the share prices of e-commerce giant Alibaba and other tech companies on foreign stock exchanges.
The government also is loosening controls on real estate financing after tighter controls on debt that Chinese leaders worry is dangerously high caused economic growth to slide starting in 2021.
On Saturday, the Cabinet promised tax cuts, bank loans and other support for entrepreneurs to “promote stable growth.”
“Reopening should result in a burst of growth over the coming year,” said Goldman Sachs economist Andrew Tilton in a report Friday. Goldman raised its outlook on this year’s expansion to 5.2% from 4.5%.
Others are more cautious. The World Bank this month cuts it 2023 growth outlook for China to 4.3% from a forecast in June of 5.2%. It cited uncertainty about COVID-19 and the weak real estate industry.
The debt crackdown forced smaller developers out of business in an industry that accounts for up to 25% of China’s economic activity. Some bigger competitors missed bond repayments. Sales plunged while jittery buyers waited for the status of developers to become clear.
Financial markets are waiting to see what happens to Evergrande Group, the global industry’s most indebted company, which is trying to restructure more than $300 billion owed to banks and bondholders.
Sri Lanka’s government cuts expenses as economy tanks
Sri Lanka’s government said Tuesday it was cutting down expenses in the latest austerity drive to help it recover from its worst economic crisis.
Government spokesman and Media Minister Bandula Gunawardena said each ministry’s annual budget will be cut 5%. He said that the government was “trying its best to curtail other expenses too.”
Sri Lanka’s Parliament last month approved a 5.82 trillion rupee ($15 billion) budget, which provides for the restructuring of state-owned enterprises, reduces subsidies for electricity, and increases taxes to boost revenues based on proposals by the International Monetary Fund under a preliminary $2.9 billion bailout plan.
Unsustainable government debt, a severe balance of payments crisis and the impact of the COVID-19 pandemic led to a shortage of essentials such as fuel, medicine and food. Soaring prices have caused severe hardships for Sri Lankans, leading to a political upheaval that forced the resignation of then-President Gotabaya Rajapaksa.
His successor, Ranil Wickremesinghe, has somewhat reduced the shortages of fuel and cooking gas, but power outages continue, along with shortages of imported medicines.
Also Read: Bangladeshi passport’s ranking improves in 2023, still behind Iran and Sri Lanka as per Henley Index
Gunawardena told reporters on Tuesday the country’s economy suffered a 7% negative growth rate in 2022. “As a result, we expect that the government’s income from the taxes would drastically decline within the first three months of this year. We think this income loss would prevail throughout this year.”
Also Read: Sri Lanka's Parliamant approves budget amid economic crisis
“The treasury is facing its worst economic crisis,“ he said, adding that the government was struggling to raise the money needed to pay salaries of public servants.
The government is under pressure to reduce its massive bureaucracy of 1.6 million civil servants and is facing severe criticism over hiking taxes and the electricity bill.
Also Read: ‘’We are grateful to the Sri Lankan navy and all who have acted to save lives’’
Last year, Sri Lanka suspended repayment of nearly $7 billion in foreign debt due this year. It has since entered into a preliminary agreement with the IMF, which has agreed to provide $2.9 billion over four years depending on the willingness of Sri Lanka’s creditors to restructure their loans.
Sri Lanka’s total foreign debt exceeds $51 billion, of which $28 billion has to be repaid by 2027.
Bangladesh now world's 35th largest economy: Canadian publication
According to Canada-based online publication 'Visual Capitalist', Bangladesh has emerged as the 35th largest economy in the world.
Earlier, the IMF revealed that Bangladesh and India were the only two South Asian countries considered to be part of the 50 largest economies.
Citing IMF statistics, Visual Capitalist published the report titled 'The Top Heavy Global Economy' on December 29, 2022. It has listed countries in terms of gross domestic product (GDP).
Also Read: Economy offers reasons for optimism, even as chronic problems persist
Renowned economist Dr Atiur Rahman has said that Bangladesh's economy reached this stage due to its macroeconomic stability and 6-plus GDP growth over the last 12/13 years.
Talking to UNB, he said that the Canadian publication released an appropriate report on Bangladesh and global economists are observing the country’s continued growth even during the Covid-19 pandemic.
Dr Atiur said that Bangladesh’s economy will be the 28th largest by 2030 and its economic volume will be $1 trillion by 2035.
The country has to focus now on developing skilled human resources, good governance, and stable macroeconomic management, he said.
“Bangladesh expended around 12 percent of its total budget to infrastructure development during the last 13 years, which contributed to mega projects including Padma Bridge, Metro Rail, Rapid Mass Transit, Karnaphuli Tunnel, and the development of 100 economic zones,” he added.
As a result, an economic boom is happening in urban and rural areas.
According to the report, neighbouring country India has moved to fifth place in the world economy. Earlier, it was in the sixth position.
With a GDP of $3.46 trillion in 2022, India has overtaken the United Kingdom to occupy the fifth place.
The first, second, third, and fourth places in the list are USA, China, Japan, and Germany, respectively. The remaining five countries in the world's 10 largest economies are the UK, France, Canada, Russia, and Italy.
According to the report, two major events happened in the world in the year 2022. First, the world's population has crossed 8 billion. Second, the size of the world economy has crossed $100 trillion to $101.56 trillion.
CES startups face cautious investors amid economic woes
More than a thousand startups are showcasing their products at the annual CES tech show in Las Vegas, hoping to create some buzz around their gadgets and capture the eyes of investors who can help their businesses grow.
But amid the slew of layoffs in the tech industry and an economic landscape battered with high inflation and interest rates, many may be met with cautious investors looking for products that can deliver quick returns instead of hype.
Analysts say the event this year has somewhat of a muted tone compared to prior shows, when many companies routinely unveiled pie-in-the-sky projects that never saw the light of day. Carolina Milanesi, president and principal analyst at the consumer tech research firm Creative Strategies, said this time around, many of the tech items displayed during the show’s media preview days, which occurred Tuesday and Wednesday, have been less “flamboyant” compared to prior years, which showcased things like talking microwaves and smart jeans that vibrate to direct users.
“The economy — and I think the mood in general — is a little bit negative around tech,” Milanesi said. “It’s really getting companies to focus on real value for customers.“
CES, the most influential tech gathering in the world, officially begins on Thursday to attendees in the industry. Roughly 3,000 companies have registered to attend the event, including big companies like Amazon that are laying off thousands of employees and axing unprofitable areas of their business amid uncertainty in the wider economy.
Simultaneously, many startups are attempting to find their wings at a time when consumers are tightening their belts and being more picky about how to spend their money. And experts note the somber economic climate can be particularly difficult for companies who make hardware products — they typically require robust investments to manufacture their gadgets and often encounter challenges with securing the money they need.
Marco Snikkers, founder and CEO of OneThird, a startup that tests produce ripeness, said investors have been much more critical this year about which companies to fund. Securing investments for his own company took much longer than anticipated but luckily, he said, some existing investors stepped up to help and the company didn’t run out of cash. They were able to secure more funding last month.
“We can hopefully survive 2023 with what we have today,” Snikkers said, adding the Netherlands-based company, which also has an app, hopes to expand their products to the U.S.
Another CES attendee, Mohamed Soliman, founder of the French electric skates startup AtmosGear, said investors have been more fearful about putting money into projects during the entire pandemic and are asking for a higher level of maturity from companies before they put some skin in the game.
“I think CES could be a ‘do or die’ time for many startups,” said Wedbush analyst Dan Ives. “The clock struck midnight in terms of tech investors just giving away free money. There’s a lot more competing for capital.”
Saving money has now become a big priority for the tech industry, a shift from the past when more analysts and investors were more focused on how companies were growing. Ives said unlike products that received a lot of buzz during prior shows but didn’t have a clear revenue path, like drones, investors are now looking to fund things that can be deployed, such as artificial intelligence, chip technology and electric vehicles.
More transformational tech themes, such as broader use of virtual reality and immersive experiences in the metaverse, are also being showcased at the show. Though the metaverse has its skeptics, Ives said he believes all these technologies could lay the groundwork for what’s likely to be a fourth industrial revolution.
But as of now, a recession is potentially on the doorstep, he said. “And I think that’s the elephant in the room at this year’s CES.”
Event organizers for their part say excitement hasn’t dampened. Brian Comiskey, the director of thematic programs at the Consumer Technology Association, the trade group putting together the show, said many startups are excited to be back at the event and mingle in person with investors after COVID kept many of them away for the past two shows.
The organization also has a program, called CTA Match, that pairs startups with investors who might be interested in their products, he said, adding many companies have showcased items that can be rolled out soon, or are innovations that could be deployed if they meet the right investors.
But even entrepreneurs that raise money are facing higher costs due to inflation. That, coupled with a more challenging investment scene could mean more companies won’t be able to make it — or won’t be able to make it with the cash they have on hand, a scenario that could lead to more mergers with big companies, said Peter Csathy, chairman of the media and tech advisory firm Creative Media.
Still, startups are trying to get the most out of the show and will attempt to create buzz around their products in an effort to grab some headlines and get free marketing, Csathy said.