Raihan, S. and G. Sugiyarto (2012), “Effects of Global Crisis on Remittances and Poverty: The Case Study on Bangladesh”, Chapter 4 in ADB monograph on Global Crisis, Remittances and Poverty in Asia, Asian Development Bank, Manila

Abstract: Remittances play a critical role in the Bangladeshi economy and society. Results of the analysis using household survey data indicate that even poor households who receive remittances experience higher levels of consumption than the non-recipient households. Further, the results of the CGE model simulations suggest that a negative remittance shock brings about a fall in real GDP. The agriculture sector also suffers due to falling demand for agricultural commodities resulting from a reduction in household incomes. The export sector, however, experiences some expansion owing to a depreciation of real exchange rate and lower export prices. Poorer households appear to be the major victims of the reduction in remittance flows.

The results also indicate that a fall in ready-made garment exports reduces manufacturing sector output and real GDP through a drop in demand and export prices. However, agriculture exhibits some expansion due to falling factor prices. The real consumption and welfare effects on households are negative and poorer households consistently suffer the most from the negative shock. Therefore, a fall in remittances and ready-made garment exports represents a double whammy to the poor, calling for appropriate policies to cushion the blows.

Link: http://www.adb.org/sites/default/files/pub/2012/global-crisis-in-asia.pdf