Bangladesh seen hit hard by global recession - EU

DHAKA, May 7 - Bangladesh's economy, particularly exports and remittances, could be hit hard in the next fiscal year, beginning in July, due to the global recession, European Union officials in the south Asian country said on Thursday.

Both exports and remittances are the key foreign exchange earners for Bangladesh which totalled more than $22 billion in the fiscal year to end June 2008, officials said.

But due to the financial crisis demand for Bangladeshi products and workers has shrunk sharply, they said.

"The inflow of remittances and growth of export may be badly affected if the global economic downturn persists for long," Britt Falkman Hagstrom, the ambassador of Sweden in Bangladesh said on behalf of the Czech Republic, which holds the EU presidency. Sweden will take over the presidency from July.

Overseas jobs for Bangladeshis fell 38 percent in the first quarter of 2009 due to declining demand in major labour markets, including Saudi Arabia, United Arab Emirates and Malaysia.

The global meltdown has also forced a decline in the country's all major exports that include textiles, leather and leather products, frozen foods and jute products.

"The challenges ahead for the European Union ...and for Bangladesh, both when it comes to handling the current recession... we must all work together," Britt told a news conference.

In the fiscal year to end June 2008 Bangladesh exported nearly $7 billion worth of products in EU countries and received about $600 million as development cooperation grants.

"The EU is insisting on developed countries to get resources from G-20 fund and ask them not to forget the least developed countries like Bangladesh," said Stefan Frowein, ambassador and head of delegation of the European Commission to Bangladesh.

"We are here to help Bangladesh and we have created a fund worth of about $107 million to prevent any drop of export earnings," he told in the same press meeting.

He said the fund was absolutely dedicated for Bangladesh's export sector to develop and ensure the quality so that demand for Bangladeshi products did not shrink.

Stefan said that ambitious economic targets of the government might be jeopardised if the crisis lingered and deepen.