How the global economic development affects the local market in Bangladesh

Inflation and cost of living:

Disruption of Global Supply Chain: Evolving global supply chain issues exacerbated by geopolitical conflicts (such as the Russian-Ukrainian war) have increased the cost of raw materials, delivery of essential commodities including food and energy Prices have risen particularly, so that in Bangladesh Purchasing power has been affected. Prices rose throughout 2024, with food prices especially high
Fluctuating energy prices: As Bangladesh imports a large portion of its energy (e.g., oil and gas), any increase in global energy prices directly affects local prices, implicating transportation and manufacturing costs rise, pushing prices up again
World Bank Group

Remittances and Foreign Finance:

Remittances: Bangladesh relies heavily on remittances, with millions of Bangladeshis sending money back home after working abroad. These remittances play an important role in boosting local economies and supporting domestic consumption. But a global recession, and the U.S. a stronger dollar could reduce remittances, erode foreign exchange reserves and make it harder for the central bank to stabilize the taka.

Export Business and RMG Sector:

Global Economic Slowdown: Bangladesh’s ready-to-wear garment (RMG) industry, which is the country’s largest exporter, is somewhat unresponsive to the global slowdown, especially in Western countries, due to its high prices and its due to large market share. However, consumer spending in key markets, such as the US. and a downturn in Europe slowed export growth, putting pressure on the industry This could lead to a reduction in procurement facilities and job uncertainty for millions of people working in the sector in the 19th century
Export diversification: In response to global instability, Bangladesh is making efforts to diversify its exports, including focusing on sectors such as IT services and agricultural exports These sectors are aimed at reducing their dependence on RMG sectors, although these sectors are still in the early stages of development.

Economic Situation:

Private Banking: The global slowdown has made investors cautious, which has affected foreign direct investment (FDI) flows into Bangladesh. However, the government’s ongoing efforts to create Special Economic Zones (SEZs) to improve services are expected to gradually attract investment, especially in the manufacturing, logistics, and industrial sectors
 Despite this, the financial sector remains vulnerable to external shocks such as rising global interest rates or a downturn in global capital markets, which can affect the domestic economy.

Financial weaknesses:

Banking system pressures: Bangladesh’s banking sector has long struggled with high levels of non-performing loans (NPLs), and global economic uncertainty could exacerbate the issue

Climate Change and Environmental Challenges:

Environment: Floods, cyclones and other vulnerable natural disasters in Bangladesh are highly affected by global climate Key sector of the regional economy Agriculture of the country faces direct impacts from sea level rise and atmosphere in a state of disorder.

Long-term perspective:

Growth Path: Despite these challenges, Bangladesh is expected to experience moderate growth. The government’s vision to become a upper middle income country by 2031 is based on improving infrastructure, economic diversification and increasing human capital Strategies such as promoting green growth, money industrialization and urbanization are part of the long-term development plans of the country

In conclusion, the local market in Bangladesh is incredibly linked to global economic growth. As the country has demonstrated its resilience to global turmoil, continued efforts to diversify its economy, improve financial stability and mitigate climate risks will be key to facing the world all over the stable economic environment in 2024 and beyond