The slowing growth in exports and a decline in remittances are raising concerns about economic stability. In August 2023, exports saw modest growth at 3.8%, which, while positive considering the global economic turmoil, may not be enough to stabilize the country’s foreign exchange reserves and external account. Remittances from migrant workers, amounting to $1.59 billion in August, hit a six-month low, contributing to a 21% drop in overall remittance inflows compared to the previous year.
The external payment pressure is increasing, with the external deficit growing to $8.2 billion in fiscal 2022-23, up from $6.7 billion the previous year. Foreign exchange reserves are gradually declining. Economists suggest adopting a market-based exchange rate calculation system instead of multiple rates to attract increased remittance flow through formal channels and boost exports. They warn that continued pressure on foreign exchange reserves could have detrimental effects on the economy.