Bangladesh’s Harried Hartel Hurdles
Bangladesh shares, after leading the MSCI Frontier index in 2014 with a 40 percent spurt, tumbled in the first two months after the anniversary of disputed elections as opposition party calls for general strikes shut down the capital in January for an estimated 2 percent of GDP loss. The hartel as the action is popularly known demanded the release of detained longtime challenger Khaleda Zia as her son living abroad partially took the reins in her absence. Thousands were arrested after violence and street blockades, as garment exporters already absorbing a higher minimum wage and factory safety upgrades following the notorious Rama Plaza collapse halted or interrupted production. Separate groups of European and US manufacturers have conducted inspections and helped pay for improvements, but small sub-contractors have often skirted the process. This year GDP growth should still be 6 percent with consumption aided by lower food and oil prices, but the political standoff lingers aggravated by a hard line against the main legal religious party whose head received a death sentence several months ago despite international criticism. Sri Lankan stocks also plunged during the month before President Sirisena’s election upset against the incumbent with new parliamentary polls set for April. His populist economic platform embraces increased social spending to be financed by wealth taxes to keep the fiscal deficit around 5 percent of GDP. Growth is forecast at 7 percent on 2 percent inflation, and the rupee has been stable with the executive shift at the central bank as well with an HSBC veteran assuming the post. The President like his predecessor shuns cooperation with the UN on investigation of past civil war abuses and a return to IMF arrangements with sovereign bond access. However Mongolia has reversed course and submitted a possible standby request after reserves sank one-quarter to $1.65 billion in 2014 with a 75 percent FDI fall despite 7 percent GDP growth. Capital formation is off 15 percent with global mining correction as the $5 billion Oyu Tolgoi flagship joint venture remains stymied over funding and management difficulties. President Elbegdorj has stopped tougher investor measures and can rely on a Chinese currency swap for balance of payment support, but Russian ties have separately deteriorated with the crisis there and pressured the tugrik. With these troubles technical cooperation between the Ulan Bator and London stock exchanges has been slow to materialize with cross-listing prospects so far meager.
Bangladesh’s textile labor charges are still lower than in Cambodia which recently hiked its own minimum wage, but Myanmar has begun to emerge as another discount location despite antiquated facilities and skills as the legacy of decades of sanctions under military rule. Consumer good and telecoms multinationals have arrived and 8 percent growth is again predicted this year mainly benefiting urban elite as watershed national elections approach. Democracy standard-bearer and Nobel laureate Aung San Suu Kyi is constitutionally barred from running for president due to her foreign-born children, and the army will have to relent to change the provision in another irredeemable impasse to date.
