An economic recession, defined by the IMF as a contraction in economic activity over two consecutive quarters, is typically triggered by a widespread decline in spending, often resulting from adverse demand shocks. Factors such as financial crises, trade and supply shocks, stock market declines, increased unemployment, and housing market declines can contribute to recessions. Since late February 2022, following the Russian invasion of Ukraine, the global economy has been facing the likelihood of a recession, although the duration of this recession remains uncertain.

The Global Economy:

The United States, China, and the Euro Zone, as the three largest economies with the highest combined GDPs, have all experienced significant slowdowns. Even a moderate blow to the global economy in the coming

years could potentially push it into recession. The increase in US interest rates to counter rising inflation has had a domino effect worldwide. Most emerging economies, including Bangladesh, have witnessed a withdrawal of foreign investment as investors sought higher interest rates. Additionally, the Russia-Ukraine conflict, coupled with the COVID-19 pandemic, has disrupted the world's food supply. Since Russia and Ukraine supply 30 percent of the total global food grain market, this conflict will have a significant impact on food inflation in several nations. A World Bank report revealed alarming inflation rates for food products in Lebanon (332%), Zimbabwe (225%), Venezuela (155%), Turkey (94%), Iran (86%), Sri Lanka (80%), and Argentina (66%) between March and June 2022. The ongoing Ukraine-Russia conflict has also disrupted international fuel supplies, resulting in abnormally high transportation costs for goods in global markets. First-world countries are already experiencing record inflation due to fuel shortages, high-interest rates, and tight labor markets (USA 9.1% & UK 8.4%).

The Bangladesh Economy:

At the beginning of 2022, Bangladesh's economy seemed to be on a growth trajectory, buoyed by a receding pandemic, a rebound in economic activities, and the reopening of global markets. Although Bangladesh did not experience a severe impact during the 2007 global financial crisis and managed to weather the pandemic reasonably well, the economy has recently come under pressure, particularly due to the repercussions of the Ukraine-Russia conflict.

prices in the global market and the gas shortage within the country could pose challenges in the coming years. Another worrisome factor is the potential decline in remittances during the looming recession. Recent data from the Bangladesh Bank shows a substantial decrease in foreign exchange reserves, partly attributed to the increasing incidence of money laundering. The Bangladesh Financial Intelligence Unit (BFIU) reported 8,571 suspicious transaction reports with cases of over-invoicing ranging from 20% to 200%. These events could spark inflation. On a positive note, during economic downturns, consumers in developed countries tend to opt for relatively low-cost ready-made clothing, presenting an opportunity for increased export of garments manufactured in Bangladesh. Export earnings have seen substantial growth, with shipments rising by 35.14% between July and April 2022. The export of Bangladeshi goods, particularly Ready-Made Garments (RMG), which constitute over three-quarters of the country's total exports, has not experienced a significant decline.

Current Economic Challenges and Mitigation Measures:

Bangladesh faces a range of economic challenges, including employment generation, inclusive growth, recovery from the pandemic, inflation, the rise in the value of the dollar, increased imports, and a decline in remittances. These constraints can be gradually mitigated through appropriate macro and micro-level measures such as maintaining stable forex reserves, ensuring food security, and securing a reliable supply of gas and electricity to industries.