Awami govt set to destroy backbone of Bangladesh economy

[anonymus]

Without taking triple digit inflation in some and double in full extents, devaluing local currency and measuring GDP by it against the internally promulgated one; any rosy equation on GDP's growth could be declared but the reality of 2/3 of the population's endless sufferings for triple digit increase of food, energy and rent's cost wouldn't reflect through it.

No,

6.7% GDP growth rate is your Real growth rate.It is after discounting Inflation,appreciation or devaluation in currency and money supply.It is Nominal GDP growth rate which take into account Inflation,appreciation or devaluation in currency and money supply.

What's the Difference Between Nominal and Real?

Bangladesh GDP Growth Rate

Formulae for calculation of nominal GDP growth rate


GDP growth ={(GDP(year)/GDP(year-1))-1}X 100

List of countries by nominal GDP growth rate - Wikipedia, the free encyclopedia

For bangladesh it is

GDP 2009-10 = 6943243 million taka

GDP 2010-11 =7874950 million taka

Nominal GDP growth rate = (7874950/6943243 - 1) X 100 = 13.4%

http://www.bbs.gov.bd/WebTestApplication/userfiles/Image/BBS/GDP_2011.pdf

You people simply hate awami league because it lacks razakar spirit and try to justify that by using factually incorrect argument.

Finance minister is smart man for destroying macro economic stability. Dry out money supply so no money available for business to take loan from to maintain and expand their business. Even Awami businessman like Ak Azad prdicticting gloomy situation of economy. Bangladesh Bank already announced contractionary money policy to accomodate awami regime bank borrowing. This will result further shortage of fund in bank. Business will be further squzzed and negative GDP growth will be reflected (if not cooking the book) as trailing indicator.

Even though one should not expect that a hate driven razakar to understand the concept but monetary tightening leads to decrease in Inflation.

http://en.wikipedia.org/wiki/Money_supply

http://www.economicshelp.org/blog/111/inflation/money-supply-inflation/

http://www.marketoracle.co.uk/Article4482.html

Awami regime seems created perfect condition for indian business to grap Bangladesh market and export houses by cornering local export/business houses. There has already been trend that pharmaceutical market became indian dumping ground bacuse of condition created by Awami regime.

India is leading manufacturer of Generic pharmaceutical products.You cannot compete in that field.

http://www.in.kpmg.com/pdf/indian pharma outlook.pdf

 

[idune]

The Rise and Fall of One of the World's Worst-Performing Stock Markets

By Neel Chowdhury

Nobody in Hafizur Rahman's family asked too many questions when the money they sent home to Bangladesh doubled or even tripled within two to three months. "He was like a prince," says Mirza Golam Sabur of his brother-in-law. So when Sabur was told last May that his 55-year-old brother-in-law died suddenly of a heart attack, he was shocked. Shocking, too, was the discovery that the tens of thousands of dollars sent to Rahman by relatives in Europe and North America was largely gone. The funds that they planned to use to buy retirement homes for relatives in the southern port city of Khulna had disappeared in Bangladesh's volatile stock market.

Woeful tales like the Rahmans' are multiplying across Bangladesh as the country's benchmark stock index, which has dropped 55% since early 2011, continues to fall. Although Bangladesh has seen booms and busts before during its stock exchange's 58-year history, the steep losses suffered over the past 12 months by millions of small investors threaten to bring fresh economic and political turmoil to a long-suffering nation that seemed, at last, to be gaining ground. (Watch TIME's video "Fleeing Catastrophe, Stuck in the Slums of Bangladesh.")

Between 2006 and '11 Bangladesh's booming garment industry fueled average economic growth of 6.3%. In 2005, Goldman Sachs included Bangladesh among the "Next 11" rapidly emerging economies to succeed Brazil, Russia, India and China. J.P. Morgan followed suit in 2007, including Bangladesh in its "Frontier Five" markets. Today, though, the market's dramatic rise — and swift fall — seems like a cautionary tale for emerging-market investors oblivious to the perils of hasty banking deregulation and rapid capital inflows.

So what went wrong? The country's growth spurt was fueled by the garment industry, where some 2.5 million workers toiled for about $40 a month, a third of wages in southern China. Low costs helped Bangladesh become a hub for global apparel makers, including H&M and Li & Fung. In 1993, the value of Bangladesh's garment exports was under $2 billion, according to Stockholm-based Brummer & Partners, a large private-equity-and-hedge-fund company that invests in Bangladesh. By 2011, garment exports had risen sixfold to $17.9 billion.

Polo shirts and blue jeans were paired with another fast-growing export from Bangladesh: Bangladeshis. Some 5 million Bangladeshis work abroad, many as construction workers, mariners and restaurant owners in Southeast Asia, the Middle East and Great Britain, and the $12 billion they sent home last year swelled Bangladesh's $100 billion economy with cash. Coupled with the earnings from garment exports, that cash flooded into more than three dozen banks across the country, many of which were newly licensed, small and unprofessionally managed. As inflation crept up and more banks entered the marketplace, the pressure to generate higher returns for depositors mounted. That, in turn, turned banks into stock-market players. The central bank allowed banks to invest a tenth of their total liabilities in the market. "This was considerably less restrictive than the international norm," says Ifty Islam, managing partner at Dhaka-based investment firm AT Capital. (Read "Strike Divides Dhaka as Unrest Deepens.")

As banks poured money into stocks, the market rocketed skyward. In 2010, the benchmark index of the Dhaka Stock Exchange climbed over 90%. Such heady gains fed a hunger for investing among small-time players, even among those who knew little about the stocks they were trading. According to AT Capital's Islam, retail brokerage accounts in Bangladesh jumped sevenfold from roughly half a million in 2007 to 3.5 million by 2010. "Many people didn't have any investment knowledge," says Sabur. "But the market was so bullish everyone was buying."

Unsurprisingly, the bubble soon burst. By the end of 2010, inflation had climbed past 11%, pushing up the price of staples. Alarmed, the central bank began tightening, in part by proposing stricter limits on banks investing in the market. That became the trigger of a punishing one-year-old market decline that's wiped out all the gains of 2010 and is now threatening to widen into a more serious economic and political crisis. As Europe's demand for garments slows and fewer Bangladeshis find work abroad, the country has begun to run a current account deficit. That is eroding the value of the Bangladeshi taka, which has dropped by roughly a fifth against the dollar over the past two years and is accelerating the market's slide. "It's going to get worse before it gets better," predicts Arjuna Mahendran, the Singapore-based head of investment strategy for HSBC Private Bank.

Worryingly, high food prices are stoking public anger against the government Sheikh Hasina. Over the past year, groups of disgruntled investors have been regularly gathering outside the stock exchange's Dhaka headquarters to burn tires and protest, venting their frustration with a regime they feel has not taken adequate steps to curb market speculation and protect small investors. Last April, a committee led by Khondkar Ibrahim Khaled, a respected former banker, submitted an official report to the government that alleged extensive market manipulation prior to the initial Jan. 2011 crash, ratcheting up tensions ahead of a general election to be called by mid-2013. (Read "Behind Bangladesh's Failed Coup Plot: A History of Violence.")

Decades of steady economic progress won't be necessarily unraveled by a market rout alone. Kiron Bose, chief investment officer of Brummer & Partners' Bangladesh-focused private equity fund, emphasizes that the stock market has not traditionally been a major source of capital for Bangladesh. Analysts say the country's larger banks are solvent enough to continue lending to companies and individuals, albeit at double-digit interest rates. "I still believe in the country's long-term story," echoes AT Capital's Islam, who points out, for example, to a report by the consulting firm McKinsey that says if Bangladesh can upgrade its road and ports and Chinese manufacturing rages continue to rise, the country's garment exports could further double to surpass $40 billion over the next decade. Even so, to small investors like Sabur's late brother-in-law, hitching his fortunes to a roller-coaster market was a devastating ordeal.


Bangladeshi Investors Badly Hit by the Stock-Market Crash - TIME

 

[idune]

Price hike of cement, rodRealtors, contractors face tough time

Hasibul Aman and Alimuzzaman

The price hike of two basic construction materials has added further strain on the country’s real estate sector and the government and semi-government contractors.

Country’s already messy real estate sector may reach on the verge of collapse hit by recent building materials price hike, the realtors fear.

Apart from the private sector, infrastructure development projects under the public sectors are to face dire consequence of the price hike as well, officials said.

The government and semi-government contractors are also passing a tough time as they have to follow a government-set price of materials which had not

been adjusted with the recent hike in the prices of construction materials.

“Foreign-aided projects don’t suffer too much in such situations as the increased costs are entertained by the donors,” an ERD official told daily sun on Sunday.

“But the government supported ones are sure to suffer as the local project cost hike processes are very complicated,” he added.

The real estate sector received a major shock early this year when the vital construction materials — rod and cement — witnessed a sharp price spiral, after nearly one year’s pause.

In a span of 15 days, rod prices soared by Tk 6,000 to Tk 8,000 per tonne and that of cement rose by Tk 20 to Tk 30 per bag, leaving their market in a turbulent situation.

Meanwhile, cement manufacturers told daily sun that they are unable to produce enough cement due to increased import costs of raw materials as the price of the dollar had been on the rise.

A high official of Shah Cement Limited said the price of the item went up over a period of one week due to recent hike in fuel oil prices.

In the retail markets yesterday, a 50-kg bag of Shah Cement was selling at Tk 435, Seven Ring Cement at Tk 430, Crown Cement at Tk 430, Premier Cement at Tk 435, Tiger Cement at Tk 430, Fresh Cement at Tk 430 and Mir Cement was selling at Tk 430.

On the other hand, BSRM Steels Ltd, one of the country’s leading steel rod manufactures, was selling rod at Tk 70,600 per tonne while Abul Khair Steel Mills Ltd was selling the item at Tk 70,300 per tonne.

When asked about the increasing prices of cement and rod, a senior engineer of Public Works Department (PWD) told daily sun that all construction under the PWD are going on under PWD’s rate schedule and they have no plan to change the rate anytime soon.

“We (contractors) are continuing with the construction works as per government-set rate but the prices of construction materials are increasing day by day,” Hassan Sarker, a contractor working to implement a government project, said.

“A very bad time is now looming large over the real estate sector. The recent price hike of rod and cement will only deepen the crisis,” said Dr Tawfiq M Seraj, managing director of Sheltech, a local real estate pioneer.

“It will really create a lot of problems. It will lead the sector to almost a collapse,” Tawfiq, also three times Rehab president, said.

“Many companies will face closure, also sparking huge unemployment,” he continued.

The recent hike in prices of raw materials due to heated up dollar market, coupled with skyrocketing prices of land, will make middle class peoples’ dreams of owning a flat a far cry, he said.

According to Real Estate and Housing Association of Bangladesh (Rehab), some 12,000 ready flats remain unsold now in absence of power and gas connectivity and hit hard by recent share market debacle and unstable economic situation.

The sluggish trend was also reflected in recent Rehab winter fair where many companies said their ready flat sales marked a sharp decline, by nearly 60 percent, in a span of seven to eight months.

Realtors said all the problems that crippled the promising housing business have stemmed from wrong government policies and negative attitude of policymakers.

They said defective policies have shot up registry fees and also shooting up prices both for lands and apartments, ultimately shifting the price burden on the customers.

Registration fees for per square feet of an apartment went up to Tk 1500 in 2010, from only Tk 650, realtors said.

Apart from lack of power and gas connectivity, narrowed down financing scope coupled with hassles, tax at source and mandatory power generation from solar power — all had already aggravated the situation last year, realtors said.

All these things including easing exorbitant bank interest rates on housing credits and power and gas connectivity to new projects should come under kind consideration of the government, thinks Dr Tawfiq, a seasoned realtor.

daily sun | Business | Realtors, contractors face tough time

 

[M_Saint]

No,

6.7% GDP growth rate is your Real growth rate.It is after discounting Inflation,appreciation or devaluation in currency and money supply.It is Nominal GDP growth rate which take into account Inflation,appreciation or devaluation in currency and money supply.

What's the Difference Between Nominal and Real?

Bangladesh GDP Growth Rate

Formulae for calculation of nominal GDP growth rate


GDP growth ={(GDP(year)/GDP(year-1))-1}X 100

List of countries by nominal GDP growth rate - Wikipedia, the free encyclopedia

For bangladesh it is

GDP 2009-10 = 6943243 million taka

GDP 2010-11 =7874950 million taka

Nominal GDP growth rate = (7874950/6943243 - 1) X 100 = 13.4%

http://www.bbs.gov.bd/WebTestApplication/userfiles/Image/BBS/GDP_2011.pdf

You people simply hate awami league because it lacks razakar spirit and try to justify that by using factually incorrect argument.




Even though one should not expect that a hate driven razakar to understand the concept but monetary tightening leads to decrease in Inflation.

Money supply - Wikipedia, the free encyclopedia

The link between Money Supply and Inflation | Economics Blog

http://www.marketoracle.co.uk/Article4482.html



India is leading manufacturer of Generic pharmaceutical products.You cannot compete in that field.

http://www.in.kpmg.com/pdf/indian pharma outlook.pdf

GDP 2009-10 = 6943243 million taka

GDP 2010-11 =7874950 million taka

Nominal GDP growth rate = (7874950/6943243 - 1) X 100 = 13.4%

As the saying goes like a little learning is a very dangerous thing, you just proved its worth without realizing that your provided figure was in TK that happened to devalued by double digit. For example $1.00 was equivalent to TK/= 65.00 in NOV, 2010 but it rose up to TK/=83.45 by now. So, conversion of Taka's figure to $$ would actually show the negative growth. And listen up, I took Macro, Micro, Development, International, Financial MGT and also studied Econometrics. So, don't try to teach me ECO 101.

 

[anonymus]

As the saying goes like a little learning is a very dangerous thing, you just proved its worth without realizing that your provided figure was in TK that happened to devalued by double digit. For example $1.00 was equivalent to TK/= 65.00 in NOV, 2010 but it rose up to TK/=83.45 by now. So, conversion of Taka's figure to $$ would actually show the negative growth. And listen up, I took Macro, Micro, Development, International, Financial MGT and also studied Econometrics. So, don't try to teach me ECO 101.

If you would have read my last post or took trouble of clicking on the links you would have easily known that exchange rate has no effect on real GDP growth calculations.SO GDP real of bangladesh remains 6.7% whether exchange rate of taka/dollar is 0.001 or 1000.

How to Calculate Real GDP:

To calculate real GDP, the BEA omits imports. It also excludes foreign income from American companies and people. That negates the impact of exchange rates. The BEA takes out inflation by calculating the implicit price deflator. This is the ratio of what it would cost today compared to a base year. It's similar to the Consumer Price Index (CPI), but is weighted differently. The BEA publishes implicit price deflators in NIPA table 1.1.9, which you can find in the Interactive Table.

Real GDP vs nominal GDP and how you calculate them

 

[THE BOSE]

The Economy of India is the ninth largest in the world by nominal GDP and the third largest by purchasing power parity (PPP).[1] The country is one of the G-20 major economies and a member of BRICS. The country's per capita GDP (PPP) was $3,703 (IMF, 129th in the world) in 2011, making it a lower-middle income economy.[10]

The independence-era Indian economy (before and a little after 1947) was inspired by the economy of the Soviet Union with socialist practices, large public sectors, high import duties and lesser private participation characterizing it, leading to massive inefficiencies and widespread corruption. However, later on India adopted free market principles and liberalized its economy to international trade under the guidance of Manmohan Singh, who then was the Finance Minister of India under the leadership of P.V.Narasimha Rao the then Prime Minister. Following these strong economic reforms, the country's economic growth progressed at a rapid pace with very high rates of growth and large increases in the incomes of people.[11]

India recorded the highest growth rates in the mid-2000s, and is one of the fastest-growing economies in the world. The growth was led primarily due to a huge increase in the size of the middle class consumer, a large labor force and considerable foreign investments. India is the fourteenth largest exporter and eleventh largest importer in the world. Economic growth rates are projected at around 7.0%-7.5% for the financial year 2011-2012.

 

[M_Saint]

If you would have read my last post or took trouble of clicking on the links you would have easily known that exchange rate has no effect on real GDP growth calculations.SO GDP real of bangladesh remains 6.7% whether exchange rate of taka/dollar is 0.001 or 1000.

How to Calculate Real GDP:

To calculate real GDP, the BEA omits imports. It also excludes foreign income from American companies and people. That negates the impact of exchange rates. The BEA takes out inflation by calculating the implicit price deflator. This is the ratio of what it would cost today compared to a base year. It's similar to the Consumer Price Index (CPI), but is weighted differently. The BEA publishes implicit price deflators in NIPA table 1.1.9, which you can find in the Interactive Table.

Real GDP vs nominal GDP and how you calculate them

While commenting on conn artists of hedge funds, a lefty leaning analyst once revealed that most of the hired number-crunchers were instructed to bring jungle's math to make equation extremely voluminous but to reach at designated figure by those conns. So, where did their MIT's PHD on Financial Engineering or math or physics lead them to land? And hearing him, I solved a mystery that became a year of itch for me. The story went like, I understood Micro, Macro well while taking Bangla but had trouble with equation in Paul A Samuelsson’s one. Being an ex-Math tutor, that shouldn't have been the case but omitting, add-leaving ingredients of equations didn't seem like right. I guess you would read my leaps and understand the message, thanks.

 

[idune]

Non-food inflation in Jan spikes to 13.16pc

FE Report

Point-to-point price inflation in January last swelled to 11.59 per cent, 0.96 percentage points higher than in the previous month, as the non-food inflation jumped to a record high 13.16 per cent, department of statistics has said.

Bangladesh Bureau of Statistics (BBS) data, released Monday, showed that the food inflation increased to 10.90 per cent in January 2012 from 10.40 per cent in December 2011 and non-food inflation rocketed up to 13.16 per cent in January from 11.38 per cent in December.

High prices of rice, pulses, fish and meat, fruits, edible oil and milk pushed the food inflation upward, while rising prices of cloth, fuel oil, treatment and transportation cost, hike in house rent, increase in prices of furniture and home appliances and laundry equipment contributed to further rise in the non-food inflation in January, said BBS chief Shahjahan Ali Mollah.

At a briefing in the city BBS Director General Shahjahan Ali Mollah said: "The government has raised the electricity price to cut subsidies. It has fuelled the non-food inflation."

Development analysts said the poor people in the rural areas and the fixed- income group in the urban areas were the hardest hit by the soaring prices of food and other commodities over the last few months.

BBS statistics showed the point-to-point inflation both in rural and urban areas in January this year had reached 11.15 per cent and 12.73 per cent from 10.25 per cent and 11.62 per cent respectively in December 2011.

In the rural areas, the food inflation rose to 10.18 per cent in January from 9.60 per cent in December, while the non-food inflation swelled to 13.23 per cent last month from 11.62 per cent in the previous month, data released by the BBS showed.

Prices of food items went up to 12.56 per cent in January from 12.26 per cent in December in urban areas, and the non-food items' prices increased to 12.97 per cent in January 2012 from 10.74 per cent in December 2011.

During budget announcement, the government had set 7.5 per cent average inflation target in the current financial year 2011-12, which it revised upward to 8.5 per cent in the middle of the current fiscal.

Non-food inflation in Jan spikes to 13.16pc

 

[idune]

Govt fails to rein in rising inflation
Economists fear, the economy will head towards a disastrous situation

Tuesday, 07 February 2012
Author / Source : MIR MOSTAFZUR RAHAMAN

Dhaka, Feb 6: Despite various measures taken by the government as well as the central bank, inflation continues to be a headache for the common people. Economists fear that if the current scenario prevails, the country’s economy would head towards a “disastrous situation”.

In its annual report released on Monday, the Bangladesh Bank admitted that in spite of various precautionary measures, it will not be possible to keep the inflation rate to single digit level. “Rising inflation has hit the common people hard. If the governnment fails to check the inflation rate, we’ve to face a disastrous situation,” said Prof. Abu Ahmed of Dhaka University.
According to the latest data released by the Bangladesh Bureau of the Statistics (BBS), inflation rose to 11.59 per cent on point to point basis in January. The average annual inflation was estimated at 10.91 per cent in January this year, compared to only 8.14 per cent in the previous year.

Experts said the government’s high borrowing from the banking sector, failure to contain devaluation of the local currency against the US dollar and frequent rise in fuel prices were instrumental in pushing up the inflation rate.

The BBS data shows that the food inflation in January was 10.18 per cent and non-food inflation 13.23 per cent. The monthly rise in food inflation was 1.29 per cent, reflecting rising prices of essential items, such as rice, lentils, fish, egg, soya bean oil and milk powder.

“A printed note of Taka one has the effect of Taka four, after being circulated in the market,” said Dr Zaid Bakht. a noted economist, while explaining the link between inflation and government borrowing. He suggested that the government should cut down on unnecessary expenditure to reduce the inflationary pressure.

Prof. Abu Ahmed blamed the central bank’s monetary policy, besides high borrowing, for the rising inflation. He said the central bank’s contractionary monetary policy has resulted in low credit flow, causing poor investment and lack of employment that slowed down production and generated the real inflation.

Apprehending a disastrous situation, he added that the current crisis could be averted if the central bank refused to follow the policy prescribed by the International Monetary Fund (IMF). Instead of following the IMF’s prescription, the central bank should follow an independent monetary policy based on the country’s need, he said, adding that the IMF had no proper understanding of the dynamics of the economy of a poor country like Bangladesh.

Dr Mostafizur Rahman, executive director of the CPD, pointed out that rising inflation and high growth in imports has put pressure on the country’s BoP situation and created macro-economic imbalance.On the other hand, massive depreciation of the Taka against the US dollar also jacked up commodity prices, thereby triggering inflation. The Taka has depreciated by more than 20 per cent against the US dollar between January 2011 and January 2012, according to Bangladesh Bank (BB) statistics. Citing examples, importers said the import cost of milk powder was up by 25 per cent, while it was 24 per cent for crude soya bean oil owing to the rise in dollar prices.

Govt fails to rein in rising inflation

 

[Maira La]

And the funniest part of the story: Awami government is run by people with DNA similar to yours.

That's why I keep saying, we must do something to raise the average IQ in BD.

Too many BNP/BAL idunes and very few people who think outside the box - this is bad.

 

[scholseys]

And the funniest part of the story: Awami government is run by people with DNA similar to yours.

That's why I keep saying, we must do something to raise the average IQ in BD.

Too many BNP/BAL idunes and very few people who think outside the box - this is bad.

Bro problem with most of the bangladeshis are they cant accept a moderate sane minded logical person. I am a right wing moderate who supports BNP. But i get labelled indian dalal by BNP folks and mollah by Awami League folks, it seems the only way to be accepted in bangladesh is to be a fanatic and disregard any logic and belief in all the conspiracy theories. I myself believe that raw has some influence in Bangladesh, but some of the stuff people say are just taking the mickey out without any hard evidence.

 

[Maira La]

Bro problem with most of the bangladeshis are they cant accept a moderate sane minded logical person. I am a right wing moderate who supports BNP. But i get labelled indian dalal by BNP folks and mollah by Awami League folks, it seems the only way to be accepted in bangladesh is to be a fanatic and disregard any logic and belief in all the conspiracy theories. I myself believe that raw has some influence in Bangladesh, but some of the stuff people say are just taking the mickey out without any hard evidence.

Of course RAW has influence here. So does ISI. It's in their mandate to operate internationally, especially within their immediate neighbors.

As for most Bangladeshis not tolerating your comments - I wouldn't say it's most Bangladeshis. These are party fanboys. They think the party they support have some sort of miracle solution to all of the nation's problems. Ask idune why Bangladesh is an LDC. Obvious answer: because we didn't vote BNP to power!

 

[kobiraaz]

No one ever called me Razakar or Dalal or Raw Agent....Yeah... Though i am a religious fanatic!! People should learn that there is way to maintain religion and Brotherhood without betraying own people.......

 

[scholseys]

RAW has far more influence in Bangladesh politics than ISI. India just wants to use Bangladesh as its vessel state. We gave away the transit with minimal concession. BAL does little or no negotiation, just does what India wants them to. BAL leaders are strongly Indian influenced who paint Bangladesh as a rising islamist radical state, which is far from the truth. BAL destroyed our badass BDR, now our border paramilitary troops are bunch of pansies controlled by India. It is also true that BNP does far more to the economy and the growth of the industries than BAL, BAL has its route in communism and most of the BAL leaders cherish Marxist ideologies by Brezhnev and Lenin. India is here to stay, they are our neighbors, we should have good relations with our neighbors with our sovereignty intact, not bend over for India's interests, this is where awami league fails epically. We are Bangladeshis from Bangladesh, and this is our sovereignty.

 

[Zabaniyah]

No one ever called me Razakar or Dalal or Raw Agent....Yeah... Though i am a religious fanatic!! People should learn that there is way to maintain religion and Brotherhood without betraying own people.......

On PDF, I've been called both a Razakar and a pro-Bharti dalal

True statement.