Macroeconomic impacts of the global financial crisis on the Bangladesh economy

This paper examined the impacts of the current 2007-09 global crisis on the macro-economy of Bangladesh. The evidence suggests that the impact of the crisis had been rather mild with modest slowdown of the economy and a few critical sectors (exports and remittances), but at the same time, the adverse effects being offset by improvements in some other sectors (agriculture and equity markets), thus showing remarkable resilience to the crisis. Further, the impact on Bangladesh was much milder than those felt in both developed countries (such as the U.S. and EU countries) and other emerging economies such as India and China. Appropriate and timely policy actions at the global level along with the country’s own fiscal and monetary policy stimulus were helpful in achieving these results. Additional factors that helped minimize the adverse impacts include the country’s relative non-exposure to the overseas toxic assets, growth of the agricultural sector, and resilience of garment exports and worker remittance sectors. A SWOT analysis of the country indicates that, as the global economy turns around, the country could take advantage of many global opportunities provided the country can capitalize on its strengths, improve upon its weaknesses and deal effectively with emerging threats. Policy actions that may be helpful include strengthening internal and external sector reforms, infrastructure development, export diversification, finding new markets for exports and worker employment abroad, and leveraging benefits from cooperation and partnerships with foreign businesses including overseas Bangladeshi expatriates, among others.