Dropping oil prices
As the world braces for a recession whose depth and duration is anybody's guess, one silver lining of the downturn is already clear: the crisis at the gas station is over. In an economy now facing nothing but headwinds, declining oil prices may be about the only thing putting money directly back in consumers' pockets.
The bad news is the reason for the price cut: the global economy is headed for a serious slump, which is already slashing demand for oil. Consumers all over the world had already begun cutting back on their consumption in response to the upward price shock. Now economic growth is slowing everywhere.
The export sectors, especially the garments sector will face adverse consequences arising from the world financial crisis. From the on-going decline in consumption expenditures in the industrial countries, apparel demand will decline. Therefore, job market may get squeezed for the Bangladeshi non-skilled and medium-skilled workers.
The vulnerability in the country's current account will also depend on the inward flow of remittances. The lion's share of its remittances comes from the Middle East, followed by the United States. It is expected that the flows of remittances from the United States and other European countries will slow down.
The country's manpower export may face setback, as recruiters fear a cut in demand for Bangladesh's cheap labour due to the looming threat of a prolonged global recession.
As the major export competitor countries of Bangladesh experience a sharp drop in the value of their currencies, a significant appreciation in the Bangladesh taka may erode the country's competitiveness to some extent.
Although the economy of Bangladesh has shown significant resilience to the global economic crisis until now, it would really be interesting to see how long it can stop itself from being affected.
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