'Recovery likely after March’

Businesses in Bangladesh will likely start recovering from the ongoing economic downturn after March 2024 if the inflationary pressure and US dollar crisis in the country are resolved.

But the situation will worsen if taka, the local currency, faces further devaluation against the greenback, according to Malik Mohammed Sayeed, chief operating officer of Square Toiletries.

"Production costs rose substantially in 2023 due to the higher import cost of raw materials," Sayeed said in an interview with The Daily Star yesterday.

He informed that the import costs did not rise due to higher prices in the global market, but rather due to the currency devaluation and subsequent increase in duty payments.

For example, the customs authority imposes a duty on referral prices, meaning that products such as noodles imported at $800 per tonne will face duty based on its referral price of $1050 per tonne.

As such, importers unnecessarily pay an additional 25 percent import duty.

Sayeed also said sales of fast-moving consumer goods (FMCG), particularly cosmetics and toiletries, have decreased by at least one-fourth of previous levels due to a hike in product prices amid inflationary pressure.

The annual turnover of the FMCG market came down to around Tk 15,000 crore in 2023 from Tk 20,000 crore in 2022, he added.

Multinational companies control about 67 percent of the overall market while the remaining 33 percent is shared by local manufacturers such as Square, Kohinoor and ACI.

With this backdrop, Sayeed stressed the need to control inflation while also increasing the country's foreign exchange reserve in order to stabilise the market.

He also said product prices will not come down overnight, but the market situation will improve gradually in 2024 if inflation is controlled.

Consumers were forced to reduce their purchases of FMCG in the outgoing year in order to survive the inflationary pressure, which is very natural, he added.

According to Sayeed, almost all sectors suffered the same fate as FMCG throughout 2023.

"But we are optimistic about improving slightly in 2024 as there is the possibility to stabilise the political situation," he said.

"Besides, the government will try to take measures to revive the economy," he added.