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This letter was originally sent to LightCastle Bimonthly Newsletter subscribers.
Finally, it’s 2024! New year, new beginnings. The much-awaited 2024 finally arrives with a renewed sense of hopes and dreams; ambitions and aspirations. But would the long-held visions for a better reality appear on the horizon?
According to the World Bank’s latest report, ‘Global Economic Prospects,’economic growth is expected to lower to 2.4% in 2024 – the third consecutive year of deceleration. The recent war in the Middle East on top of the ongoing tussle between Ukraine and Russia has further aggravated the the geopolitical risks. Not to mention, the fresh exchange of strikes between the US, UK, and Yemen only heralds more bad news. These geopolitical discords are not only threatening economic outlooks but more crucially, endangering the lives of millions of innocent people.
Amid the global tensions, Bangladesh – with all the internal strifes and uncertainties around its election – has come to reinstate the incumbent party back again into power. The people of the country will now desperately want action-driven changes in policies that will lead to curbing inflation, increasing foreign currency reserves, expanding public investments, improving financial and banking systems, enhancing business climate, ensuring food security, and addressing climate-induced vulnerabilities. If the above-mentioned issues are not prioritized, chances are the economy will face a decline in private consumption, adversely impacting domestic demand, and hence the economic prosperity.
If history teaches us anything about economic growth, one cannot overstate the significance of investment accelerations. Time and again, we have seen the direct correlation between economic prosperity and investment accelerations. Look at India, Tukey, South Korea, and even Uganda among several others. Countries that had investment accelerations often reaped an economic windfall: output growth increased by about 2% while productivity growth increased by 1.3% year on year. Other associated benefits also include – a drop in inflation, improved fiscal and external balances, a decline in the national poverty rate et al. For that to happen, we need comprehensive packages of policies fostering macroeconomic stability and addressing structural reforms.
Raising investment growth will play a critical role for Bangladesh in helping it navigate through turbulent times. Alongside policy packages, we need to encourage catalytic financing and boost private capital mobilization – particularly for achieving climate commitments. DFIs, MDBs, and Private Foundations can and should offer various mechanisms to de-risk private investments and promote innovative investment products. From LightCastle, we have been working towards promoting catalytic financing across a variety of sectors. We believe it holds the key to unlocking new development opportunities and significantly benefiting the lower-income and marginalized population.
Furthermore, favorable trade liberalization policies such as incentivizing greater exchange of financial flows, knowledge, and innovation will help improve employment and propel the flourishing of value-adding industries. To this end, promoting Bangladesh as an attractive investment destination will need to serve as a critical objective for the government. Closer collaboration with the private sector can lead to the optimum results of big transformative changes occurring in the near future. To this end, our coordinated efforts with other private partners to launch the Invest Bangladesh platform aim to serve as a guiding tool and a catalyst for bridging the gap between Bangladesh and the rest of the world.
Per the World Bank estimates, Bangladesh’s economic growth is expected to lower from 6% to 5.6% in 2024. Against this projection, it is high time we draw lessons from the world and work towards accelerating investments. Without robust policy intervention, I’m afraid, the investment growth is likely to remain tepid for the remainder of this decade and even beyond.
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