It can't be said with full confidence that the economy is on its way to an all-out recovery. There are still certain uncertainties, worries and threats regarding how things will be in the new year. Some problems are global while some are unique to Bangladesh. Certain questions need to be asked to understand how the economy of the new year will fare.
People’s predictions: A Paris-based market research organisation Ipsos conducted a global survey in early December. The organisation questioned 22,000 people in 33 countries across the world about their predictions for 2022. According to the survey, 61 per cent people predicted the world economy will be better than last year. And 77 per cent people believe they will remain happier this year compared to the previous year. Then again, 56 per cent people think, 80 per cent of the total world population will come under at least a single dose of vaccine though there are some worries over Covid-19.
The respondents of the survey also raised issues of concern. Of them, 75 per cent think prices of essentials will rise in higher proportion than their income in 2022 while 35 per cent predict that leading share markets of the world will witness a drastic fall in the new year.
Five worries of economy
The US news agency CNBC conducted a survey that included 400 investment officials, analysts and investment managers. Of them, 53 per cent said that the great concern for the economy in 2022 will be inflation. And, 30 per cent see the possible high interest rate, planned by the US Federal Reserve Bank, as a matter of great concern. Also, 17 per cent people think Covid-19 and its subsequent effects are the still major setback for global economy.
Renowned economists, research organisations and wealth managers identify five threats for the new year.
1. Inflation: The great worry or concern for all is inflation. Before the emergence of the Omicron, it was the inflation which was responsible for slowing down the economic recovery.
In early 2021, US predicted 2 per cent inflation. But the year ended with an inflation of 7 per cent. The wage rates in large economies are increasing. Fuel prices are likely to go up due to Russia-Ukraine tensions. The incidence of natural calamities is rising too due to climate change. As a result, food prices to see a massive hike. So, there are worries over inflation.
2. Omicron: Omicron, the new variety of Covid-19 which was identified in South Africa first, is still raising concern over the world economy. Many things depend on how fatal the Omicron will be.
3. Interest rate: Investment will be hampered if interest rates are raised are to check inflation. The dollar value will go up. Normally, a monetary policy is prepared by the Fed considering inflation and employment.
4. Share market: The majority of people think that profits from share market investment will be less in the new year.
5. Disparity: The latest threat is that the world economy will recover, but it will not happen in all countries equally. The disparity between countries and between people will widen.
How much will inflation rise? How fatal will Omicron be? How much of stimulus will be back in the banks? How will world trade emerge? And will money be invested or siphoned off
Five questions for the country
How will Bangladesh's economy fare? The country’s economy is at the recovery stage. But this depends on five issues -- how well the recovery will be managed or whether it will lag behind.
How much will inflation rise? How fatal will Omicron be? How much of stimulus will be back in the banks? How will world trade emerge? And will money be invested or siphoned off?
1. Inflation: Like other countries, inflation is increasing in Bangladesh. The inflation rate is around 6 per cent. The majority of the people belong to the poor income group. Many of them lost their savings due to Covid-19. In this situation if inflation keeps rising, the poor along with the people who went under the poverty line recently, will bear the brunt.
2. Characteristics of Omicron: It is necessary to know the characteristics of Omicron as Bangladesh does not have ability to endure another set of rules and regulations or any lockdown.
3. Bank: Again, the majority of the stimulus was bank loans. If not returned, this will become default loans and the banks will face of deficit in new funds for investment. Moreover, problems will multiply if any influential quarter demands exemption from repaying the loan. It is important to keep the financial sector vibrant.
4. Exports: Undoubtedly, economic recovery depends on world trade. Supply crunch makes the world trade a lag behind at bit. But till now, Bangladesh is doing well. While remittance from overseas dropped to an extent, export revenue grows.
5. Capital flight: The last question is, is the money amassed by some people being invested here or being siphoned off? The problem is that the authorities, including the finance minister, do not know who launders the money. So the trend of siphoning off money is a great concern right now.
In conclusion: Nobody in 2019 could predict how 2020 would be. With the emergence of the Covid-19 vaccine, it was assumed that the disease will be under control and everything will be back to normal.
Many hope that this variant of coronavirus will not be fatal. Every vaccine available in the markets will be effective as a booster dose. There will be no global vaccine supply shortage. They hope prices of commodities will go down and that life will be normal again. It is difficult to determine how much of our expectations will come true. We simply have to hope for the best.