Economic Highlights of Mid-September

Quick Highlights

1. IMF Delegation Visits Bangladesh: IMF will assess Bangladesh’s economic health to decide on a $3B loan.

2. Foreign Project Scrutiny: The interim government re-evaluates foreign-funded projects, aiming to cut low-priority ones.

3. Forex Reserve Drop: Bangladesh's reserves declined to $19.4B after the Asian Clearing Union payment.

4. Credit Card Spending Declines in July: A 13.74% drop in domestic transactions during the month.

5. Mobile Banking Transactions Fall in July: 21% drop due to internet disruptions amid political unrest.

6. India Reduces Onion Export Duty: Expected to stabilize onion prices in Bangladesh.

7. Pathao Secures $12M Funding: Expansion planned for fintech offerings like Pathao Pay.

8. Gold Prices Surge: Gold to hit a record 130,000 BDT per bhori, marking a 2.8% rise this week.

9. USA Imposes Tariffs on China: New tariffs on Chinese EVs and batteries as tensions rise.

10. Power Outage in Bangladesh: 600 MW of potential overnight power supply awaits government approval.

Detailed Insights

1. IMF Delegation Visit

   • Bangladesh seeks a $3B loan from the IMF due to dwindling foreign reserves.

   • Reserves have been used to stabilize import bills in the energy sector, including fuel.

2. Foreign Projects Under Scrutiny

   • The interim government aims to halt low-return and politically motivated projects.

   • Ministries will prioritize high-return projects to optimize foreign aid usage and efficiency.

3. Forex Reserve Decline

   • Forex reserves fell to $19.4B after paying $1.37B to the Asian Clearing Union.

   • A 39% surge in remittances in August temporarily relieved the otherwise declining reserves.

4. Credit Card Spending Drop in July 2024

   • Domestic credit card usage fell by 13.74% in July, with cross-border transactions seeing the most activity in the USA and India.

   • Spending declines were notable in retail and departmental store purchases.

5. Mobile Banking Disruption in July 2024

   • Mobile banking transactions dropped over 21% in July due to internet shutdowns caused by political unrest.

   • Key declines included utility bill payments, cash deposits, and remittance collections, despite continued account growth.

6. Onion Import Relief

   • India’s reduction in export duty on onions is likely to ease pressure on Bangladesh's local market.

   • Bangladesh had previously turned to Egypt and Pakistan for onion imports due to high Indian prices.

7. Pathao’s $12M Fintech Expansion

   • Pathao raised $12M to expand fintech services like Pathao Pay and Buy Now, Pay Later for young professionals.

   • This is part of its broader plan to serve tech-enabled entrepreneurs.

8. Gold Prices Hit Record (September 15, 2024)

   • Gold prices will rise by 2.8% this week, hitting a record of BDT 130,000 per bhori, driven by the surge in pure gold costs.

   • This marks a new high since August’s rate of BDT 127,942.

9. US-China Tariff Hike

   • The US is set to impose 100% tariffs on Chinese EVs and 25% on batteries.

   • The move targets $18B in goods, intensifying the trade standoff between the two economic giants.

10. Power Outages in Bangladesh

    • Despite excess capacity, Bangladesh faces 2,000-3,000 MW daily power shortages due to idle furnace-oil plants.

    • Approval for the continuation of these plants could reduce load shedding by 600MW.