MD.

Hasan Al Mamun
ID: 133011029
International Financial Management (BUS423)
Sec: 02
Date: 30-10-16

Despite the global financial crisis of 2008, Bangladeshs exports grew significantly from
2009-2011. How would you assess the growth?

Answer: - During the global financial crisis of 2008 many developed and developing countries
have been plunged into deep recession. Bangladesh though has found itself in a slightly different
position. In fact its export grew from 2009-2011. In FY09, our exports growth rate was 11.3%
among the exported items, woven garments rose by 14.5 percent and knitwear by 16.2 percent,
while raw jute, jute goods, leather and frozen food showed negative growth during the period,
partly due to recession .In FY10 and 11 our export growth rate was increased in 20.7% to
33.4%.Which indicate that there has been deceleration in export growth, Bangladesh is one of
the few countries in the world to achieve a positive growth rate during 2009-2011 due to the
lower price and huge demand of its RMG products in EU and USA. This basically indicates that
Bangladesh has been increasing its market share in the US apparel market at the expense of
competing countries. Bangladesh Government also continued the incentives provided by the two
stimulus packages declared earlier for supporting export sector. With the aim of promoting
export diversification, additional incentives have been provided to the exporters under The New
Markets Exploration Assistance Program. But the main advantage of Bangladesh over its
competitors is its price. Exporters from Bangladesh have been cutting back on prices further in
trying to cope with the crisis. Indeed, unit prices, calculated by dividing value by quantity for the
top ten RMG products exported by Bangladesh.

How would Bangladesh be affected if the currency of China and India appreciates
against Bangladeshi Taka?

Answer: - If the currency of China and India appreciates against Bangladeshi Taka our exports
become cheaper and, inversely, imports become more expensive. This implies that the prices of
Indian and Chinese goods would increase in the international market roughly in proportion to the
rate of appreciation of the rupee and Yuan. Thus Indian and Chinese goods will become less
price competitive than similar Bangladeshi export products in the world market. But in our
domestic market we are largely depended on Indian and Chinese goods. In FY14, Bangladesh
exported goods amounting of about USD 315 million to India and USD 505 million to China
while imported of about USD 4,506 million from India and USD 5725 form China. In this case
Due to Rupee and Yuan appreciation our import from china and India will become costly and
Indian and Chinese goods price will increase in our domestic market as a result our cheap
domestic products can expand their market which will have a positive impact in our economy.
Now our export is largely deepened on RMG sector and we import cotton and machinery form
China and India to run the RMG sector so due to this appreciation our RMG sector might face
some difficulties. On the other hand Because of this appreciation our export to India and China
will decrease because our cost of production will remain same but the revenue from export will
decrease which will have a negative impact in our economy. So for a developing country which
mainly depends on its emerging imports to the foreign market it is pretty tough to continue
economic growth with such a depreciation of domestic currency.