The country’s real economy is likely to endure the greatest impact of the global financial meltdown, and the newly elected government will inherit a more challenging set of tasks than any of its predecessors in decades, according to the International Chamber of Commerce-Bangladesh (ICCB).

“The Bangladesh financial sector had little exposure to the sub-prime mortgage securities, and may emerge unscathed. But trade will clearly be affected, although the extent of the impact is difficult to quantify at this stage,” an editorial of the ICCB News Bulletin said on November 2.

“More than two million are directly employed in the RMG export-oriented industries, while more than 15 million in the backward linkage industries, and their fate hangs in the balance. How the crisis will affect our expatriate workers will depend on the economic condition in the destination countries. So, some clear policy measures are to be recommended at this stage,” the editorial said.

It said the “financial tsunami” originating in the United States has plunged the world economy into its worst crisis since the great depression of the 1930s. With the intensification of the financial crisis, world leaders struggled to come up with immediate measures to overcome it.

The US Congress approved a $700 billion package to help cash-starved firms. Besides, more than $130 billion was injected in the giant insurance company, AIG. The total commitment of the European countries is estimated to amount to more than Euro 1,400 billion. In addition, other monetary and fiscal measures have been undertaken.

The impact of the financial meltdown on the real economy is already visible, as manufacturers are cutting down their production in response to lowered demand from the consumers. In the process, jobs are being eliminated. International trade is being seriously affected.

The International Monetary Fund (IMF) expects three per cent global growth in 2009, relying on reasonably robust expansion in the emerging economies, whereas the rich-world economies are expected to grow by only 0.5 per cent.

The International Labour Organisation (ILO) has warned that the number of unemployed could rise from 190 million in 2007 to 210 million in late 2009. The number living on less than a dollar a day could rise by some 40 million, and those at two dollars a day by more than 100 million.

It will require significant coordinated policy actions among the advanced and emerging market economies to quickly recover from this economic and financial disaster. Clearly, the world needs a long-term strategy for streamlining world financial governance, including accountability and transparency in order to restore the confidence on free market mechanisms. People are demanding a new global financial architecture with proper representation of developing country interests, the editorial added.