The coronavirus resurgence in Europe, America and some parts of Asia threatens to dim the outlook of Bangladesh economy that has already suffered severe damage from the first wave of the pandemic.
Bangladesh economy staged a faster recovery in third quarter of the year after rapid return to work following the 66-day of countrywide shutdown causing at least 50 per cent loss to the country’s gross domestic product (GDP) growth last fiscal year. However, the economy likely to shrink again owing to the renewed cautions over the second wave of the pandemic, warned Economists.
Economy recovered during July-September from its worst contraction. But the second wave of Covid-19 derailed Bangladesh’s feeble economic recovery.
The central bank has also raised concern over growth outlook for Bangladesh economy on account of the second wave of Covid-19 and uncertainties regarding the quick availability of vaccine.
“The pace of recovery in economic activities during the quarter may continue in the coming quarters, aided by appropriate policy support. However, the severity of Covid-19 second wave, uncertainties regarding the quick availability of vaccine and its effectiveness and slower global economic recovery are the concern for Bangladesh’s growth outlook in the near and medium term,” according to a Bangladesh Bank report.
“The second coronavirus wave has dampened Bangladesh’s economic outlook, and economy will improve only after Covid-19 vaccines are available,” Professor Mustafizur Rahman, a noted economist of the country, told The New Nation.
He said the economy of Bangladesh has been hard hit by the Covid-19 pandemic. The economy is currently losing output due to lack of investors’ confidence and poor consumer spending.
“A mass vaccination programme will boost investors and consumers confidence and it will thereby pave the way of an economic upturn,” he said, adding, “So, making Covid-19 vaccines available will be is a ‘key challenge’ for Bangladesh economy in the new year.”
Professor Mustafizur Rahman, Distinguished Fellow of Centre for Policy Dialogue (CPD), marked weakness in project implementation, slow growth of revenue collection, recurrent cost escalation of public projects and poor public health services as other challenges for national economy.
When asked, he said, “The country has recouped almost 80 per cent of the jobs it lost since the start of the coronavirus crisis, but the employment rate won’t fully recover until 2022.”
“The economic recovery path is proving bumpier than expected as second wave of the virus has forced many nations to enforce new restrictions. Being an integral part of the global economy, Bangladesh economy will also bear the brunt of it,” Dr. Ahsan H. Mansur, Executive Director of Police Research Institute (PRI), Bangladesh, told The New Nation.
He added, “Bangladesh will not see economic stability until broad vaccination is available for local population.”
Bangladesh saw an all-time-high GDP growth of 8.15 per cent in the fiscal year 2018-19. But the growth plunged to 5.24 per cent in the last fiscal year (2019-20) as Covid-19 kept stranglehold on the economy.
“Bangladesh economy is closing out 2020 on increasingly unsteady footing owing to challenges in various fronts,” said Dr Zahid Hussain, former lead economist of World Bank’s Dhaka Office, adding, “The Covid-19 induced economic crisis has already affected Bangladesh’s foreign trade (export and import), revenue earnings, factory production and labour migration by large margins.”
He said many European countries tighten restrictions on businesses and travel after a new strain of coronavirus found in the UK. Besides, a surge in coronavirus cases in the USA also threatens to undermine recovery of the global economy.
“Europe and America are two major export destinations for Bangladeshi goods, especially read-made garments. A decline in consumer spending and economic activities there as a result of fresh Covid surge will pose a renewed threat to Bangladesh’s apparel industry that accounts for over 80 per cent of the country’s total export,” added Dr Zahid.
He observed that recovery of Bangladesh economy will remain uneven if we consider the current pandemic situation around the world. “As the pandemic continue to whipsaw economy, the government should continue its fiscal aid programme under the stimulus packages to provide a much needed bridge for affected businesses and manufacturing sectors until a mass vaccination programme is launched in Bangladesh.”
