Bangladesh business

More expensive fuel and resurgence of the krone undermine business confidence in Bangladesh

| Update:
08 February 2022 11:42:25

Faster transmission of the resurgence of coronavirus and rising fuel prices are undermining business confidence in Bangladesh’s economic recovery in the first quarter of 2022, after an optimistic rebound, according to a survey.

According to the Business Confidence Index (BCI), developed in the survey, the proportion of confident companies fell to 54.99% for the January-March quarter, compared to 60.67% in the previous quarter (October-December ).

The findings of the survey, titled “New Wave of COVID-19: State of Business Confidence in Bangladesh” and conducted by the South Asian Network on Economic Modeling (SANEM), were released in a webinar on Monday .

SANEM’s Executive Director, Professor Dr Selim Raihan, presented the results of the seventh round of the survey which fell in the middle of two probabilities: the highly contagious omicron variant of the coronavirus and rising fuel prices.

In the presentation, he said overall business confidence in January-March 2022 declined primarily due to growing concerns about the spread of the novel coronavirus variant, omicron.

The survey shows that large enterprises (57 percent) and export-oriented enterprises (56 percent) have higher levels of trust than micro, small and medium enterprises (54-55 percent) and non-exporting enterprises (54 percent). hundred).

About 58.42% of survey respondents were positive about profitability in the first quarter of the current year, compared to 65.45% in the last quarter.

“Additionally, confidence in selling and exporting also fell to 58.02% from 68.05% previously due to global tensions over the new wave of the pandemic,” the report said. investigation.

Regarding omicron adversities, 71% of companies reported a decrease in export orders and sales, followed by 79% reporting additional sanitary measures and an increase in associated costs and 82% reporting an increase in input costs.

In terms of business recovery, nearly 17% of respondents observed that Bangladesh is on the path to a strong recovery, up from 21% in the previous cycle.

Similarly, their views of a moderate recovery have fallen to 44% in this cycle from 52% in the previous cycle.

To jump-start business resumption, SANEM suggests stimulus measures such as providing low-interest working capital loans, introducing pre-shipment refinancing mechanisms for exporters, and safety net programs social security for vulnerable workers.

In the meantime, says Dr. Raihan, the impact of rising fuel prices has been significant as 97% of companies reported an increase in transport costs and 79% reported an increase in energy costs.

It also increased the risk of rising transportation costs, as reported by 94% of businesses, and the risk of rising energy costs, as reported by 81%, he adds.

The group also proposes a relaxed taxation on oil imports and a strategic, dynamic and forward-looking fuel price policy.

Meanwhile, referring to a decline in remittance flows, the study recommends evaluating remittance flows and increasing cash incentives from 2.5% to 3.0%.

From each survey cycle, SANEM calculates three indices (1) an index derived from the data of the current quarter called — Present Business Status Index (PBSI) (2) an index on the anticipation of the economic situation during the next quarter – the Business Confidence (BCI) and (3) an index on the global business environment – called the Enabling Business-Environment Index (EBI).

A total of 502 companies were surveyed from January 3 to 24, representing micro, small, medium and large enterprises – manufacturing sector, including RMG, textile, leather and tanning; pharmaceutical and chemical, agro-food, electronics and light engineering; retail, wholesale, hotels and restaurants, financial sector, ICT, transport and real estate.

The survey results show that the PBSI (year) is approaching the 60 mark in the October-December quarter of 2021, compared to 56.79 in the previous quarter, indicating further improvement.

Considerable improvement was seen in the profitability and export sales or orders sub-indicators.

Similar to the PBSI (year), the PBSI (quarter) indicates an improvement in business activities during the quarter October-December 2021 compared to the quarter July-September 2021.

Compared to the previous year, the RMG, textile, catering, agro-food and pharmaceutical sectors recorded a relatively faster recovery.

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