US fiscal cliff deal to shore up Bangladesh exports: Analysts
Kamal Uddin Ahmed, BSS ||
2013-01-03 Time : 19:30:25
Dhaka: The last-gasp deal in Washington, which kept the US economy away from the edge of the fiscal cliff, aired strong hope for financial prospect across the globe, including Bangladesh. Like many countries, financial analysts and experts here expect that the deal, which saved US economy from an anticipated recession, would also help shore up Bangladesh's export. Country's exporters echoed the similar expectation. The US House of Representatives on Wednesday passed the "fiscal cliff" bill, which raises taxes for the wealthy to avert general tax hikes and spending cuts. Analysts said in absence of the deal, automatic tax rises for all and spending cuts of $600 billion would kick in, driving back the world largest economy into recession. Following the deal, media reported that the world economy took heart from the deal as it comforted countries from Asia to Europe with prospect of economic recovery and stronger demand in the largest market for many. Bangladesh, the second largest ready-made garment (RMG) exporter to the US after China, ships around one-fourth of its apparel items to US market. Last year, clothing export to US was 23.73 percent of the total $19.10 billion of annual export earnings from the RMG sector. Talking to BSS, Ahsan H Monsur, Executive Director of the Policy Research Institute (PRI), said the fiscal cliff would have an impact on Bangladesh export to the US market because of its increased domestic demand. "This deal will not have a direct impact on Bangladesh export to the US market, but it will increase the buying capacity of the US citizens putting more disposable income in their hands," he said. The additional dispensable income will increase spending, which will eventually boost RMG exports to the US market as a large portion of Bangladesh garment go there. "Had it not been passed, the fiscal cliff would have resulted in increased tax on over 98 percent of Americans, which will not be good for many countries including Bangladesh. Now, the deal will bring good result for our export," said Monsur. Prof Dr Mustafizur Rahman, Executive Director of the Centre for Policy Dialogue (CPD), said it has been perceived that the US economy would fall in recession should the bill was not approved. "US is experiencing slow recovery from recession, and that is impacting on Bangladesh as it witnessed less than 1.0 percent growth of apparel export to US market during the first five months of current 2012-13 fiscal year," he said. Prof Mustafiz, a noted economist, said Bangladesh's position with regard to export could have been worse from any discord in bill passage, but it did not happen..this is the benefit of Bangladesh for passing the bill in US Senate." Welcoming the US Senate's approval to the bill, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Shafiul Islam Mohiuddin, said being the world's largest economy, US influence on global market is enormous. "We see the fiscal cliff deal as a positive thing for Bangladesh, which would help increase further our export to the US market," said Mohiuddin. He, however, said the RMG export to US would increase substantially if it gets tariff treatment from the US. "Bangladesh has not got the tariff treatment from the US for RMG export as yet, but we are regularly taking part in international hearing to get it," said BGMEA chief. Bangladesh's $20 billion-a- year garment industry accounts for 80 percent of the country's total export earnings and contributes a major share of the country's $110 billion GDP. Ends/AMA/03/01/13
