Could The Sunny Spell Last?

Fallen income of household
Does not reflect in real estate market.
Onion price crosses the threshold,
Though some time later onion perishes in perfect.
Riding on fallen import and remittances
Current account registered a surplus.
Despite the sunny spell of some indices,
Slashed growth forecast makes some nervous.

The scars of corona virus for the last six months are gradually surfacing. Despite government's confidence in economy, multilateral institutions heavily downsized their growth forecast for Bangladesh. Drastic measures of lockdown, appeared unsuccessful, pushed further a good chunk of the population down to abject poverty. Even some government statistical institution acknowledged deterioration of poverty rate in its latest estimation. A 10% increase in poverty rate has made the task of poverty alleviation a grueling one as more resources have to be mobilized in order to meet the expenses of wider safety net.

Price of the main staple is rising, adding further woes to the have-not communities. Unusual rain, frequent flooding cast shadow over paddy yield. Other grains' prices are somewhat showing similar upward trend. What is puzzling was the sudden rise of the price of onion. Much of the spike in onion price was attributable to Indian ban ahead of an important state election. But onion is not a quintessential ingredient and it cannot be stored for indefinite period. In fact, many of the specially arranged consignments that made their way into Bangladesh were full of rotten onions. Though onion price is stable now, it hovered around Tk 100/ kilo for several weeks. This same incident happened a year ago. Again an important Indian state election provoked a ban on onion export. I am a bit puzzled why one has to spend Tk100 or more to buy a kilo of onion.

In computer accessories market, the higher prices of hardware and gadgets prevail throughout the lockdown and postlockdown months. Prices of imported gadgets and laptop show no sign to stabilize. Unlike the computer gadget market, smart phone and feature phone market experienced a drastic cut in prices, responding in alignment with falling income of the consumers. Unlike computer market, value addition in mobile phone market reached 60-70%.

Real estate sector is another sector where flat price remains as it was before the pandemic. A report published in a popular daily divulged that small flat like 800-square-foot registered an increase in price over the years. I have not checked the price of small flat right now. Another point is that real estate sector is the sector where undocumented money is melted. No one from the government asks the owner about the source of the money.

So falling income and rising price mismatch tells the presence of unexplained things in our economy. Perhaps that is reasons why some are more optimistic about achieving six percent GDP growth rate next year.

Online shopping platforms also did well during the lockdown. However, meteoric rise of an upstart platform and its failure to deliver goods in time prompted central bank's investigation and freezing of its accounts. Unusual monthly sales arouse suspicion as the paid-up capital is so little and the owners maintained silence about company's promotion and true status. Though High Court granted bail to the company owners, many allege that it is another edition of Ponzi scheme and is meant to legalize undocumented money.

Current account balance registered surplus.But it is mostly due to fallen import payments and increased remittances. Fallen import payments indicate demand for Bangladeshi goods has fallen in overseas markets. And remittances channeled through banks are mostly savings and dues transferred by migrant workers who are returning permanently as claimed by migration experts and analysts. In addition, most of the remittances come through a bank where Middle-East based owners have stakes. In the past, specially when disaster strikes, we witnessed benevolent donors donated huge some of money to government so that macroeconomic stability maintains and forex market gets a positive signal. This is too a disaster-like situation. However, it is not know whether any wealthy donor remitted huge money this time.

Part of the workers' protest before the Sonargaon Hotel for a ticket to Saudi Arabia is a reminder that relations between the two countries turned sour in recent weeks. And if it is not thawed we may see more workers coming back to Bangladesh.

Invisible part of the economy and remittances herald a sunny spell. But it is not clear whether this spell is temporary or long.