As most people in the world are now acutely aware, an outbreak of COVID-19 was detected in mainland China in December of 2019. As of this writing, every continent in the world has been affected by this highly contagious disease, with millions of cases diagnosed in over 200 countries worldwide. The cause of this outbreak is a virus, known as the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). On 12 February 2020, WHO officially named the disease caused by the novel coronavirus as Coronavirus Disease 2019 (COVID-19), and the outbreak has been declared a global pandemic. As a result, a lockdown was issued throughout the world as there was an absence of treatment as well as a vaccine. Complete cessation of human contact is really the only way to stop the spread of the virus. Essentially, the lesser contact people have with each other, the lesser the virus can spread.
A major negative impact of this situation from an economic standpoint is that companies and organizations have shut down. The lack of business activity and a halt to cross-national trade only meant one thing: A Global Economic Recession and possibly a Depression. An integral part of an economy is its Gross Domestic Product (GDP), which is the final value of the goods and services produced within the geographic confines of a nation during a specified period of time, usually counted on an annual basis. Till now the pandemic has incurred costs summing up to somewhere around $2 trillion to 4.1 trillion, which resembles a loss equivalent to 2.3 percent to 4.6 percent of the global GDP. In other words, the entire world has suffered since the advent of this pandemic, and being a country in its developing stages, Bangladesh is no exception either. The nation’s most booming sectors have faced various trade and mobility barriers as well as legal restrictions on continuing regular business activities, as a result of which, the GDP has been impacted negatively. Despite that, the country has been working steadfastly trying to manage the crisis. Securing public health and keeping the economy stable have been the two primary goals of the country at the moment.
Although it may seem all doom and gloom from the economic perspective of Bangladesh, there remain a few rays of light that reflect upon the country’s economic future, giving it a glimmer of hope, indicating a possible step towards recovery. Speaking from an academic point of view, the country along with the entire world is in its damage control phase. As the country’s economy demonstrates indications of recovery, the World Bank has estimated Bangladesh’s Gross Domestic Product (GDP) Growth to double over the current fiscal year. The GDP Growth Rate is an important indicator of the economic performance of a nation. As per the Washington-based lender, the economy of Bangladesh is expected to grow from 1.6 percent to 3.6 percent in the Fiscal Year 2020 to 2021. The WB was quoted saying in a document, “The economy is expected to recover gradually, with real GDP growth projected at 3.6 percent in FY21”.
This forecast by the organization was made in one of Bangladesh’s Third Programmatic Jobs Development Policy Credit’s papers. However, this new estimation of GDP growth of Bangladesh by the World Bank still falls short in comparison to the Bangladesh government’s forecast of a 7.4 percent growth rate for the ongoing fiscal year, although previously it had claimed that Bangladesh’s GDP would rise by 5.24 percent. On the contrary, back in January WB stated that the GDP growth rate of Bangladesh went into negative figures as it claimed that the country’s GDP growth has decelerated by 2 percent. However, according to the document prepared in February, the organization illustrated a projection that shows that the nation’s GDP will rise by 2.4 percent.
The rate of private consumption will skyrocket as the disruptions created by the emergence of the coronavirus will gradually begin to dissipate, paving the way for further economic progress, supported by increased cash inflow from the remittance. The WB also claimed, “Export Performance is expected to recover through FY21 gradually, as improving economic conditions in developed markets supports the demand for RMG exports.” The document further explained that increased export demand, and rising private consumption along with higher public capital expenditure will support the continued recovery of GDP growth in the medium term. Projections denote that fiscal deficits are expected to reach 6 percent in Fiscal Year 2021, moderating in the medium term. Amidst such vulnerable times, contradicting and confusing statements as well as data and figures of this manner made by respected and credible bodies can make it easy for businessmen, service holders, industrialists, and the general public to get misled and be miscued. There is an aura of uncertainty surrounding the economy as of now.
However, there’s still a plethora of things to be done before it can officially be claimed that all hopes are lost. In fact, the country is still far from giving up. The nation’s biggest decision-makers and influential organizations and individuals, both political and economic, need to come forward, unite and if needed, roll up their sleeves! After all, there is an economy to save. Although there is a notable amount of drawbacks, Bangladesh is known for maintaining consistent macroeconomic stability over the past 30 years despite different national and global economic crises, countrywide political chaos and unrest as well natural catastrophes.
Moreover, the World Bank has stated that Bangladesh possesses the capacity to handle upcoming macroeconomic threats both in the near and in the medium term. The development lender stated in the document, “Bangladesh’s low debt to GDP ratio provides a significant buffer, and despite the increase in spending to deal with the pandemic, the country continues to be at low risk of debt distress.” This means even if the fall is hard, there is a significant cushion to minimize the economic damage for the nation. However, Bangladesh needs to tailor its national strategy. The country must craft a bespoke way out of this entire crisis situation, custom fit for the available resources it has and the kinds of skills and human capital it possesses, in a manner that fits its agenda perfectly and goes hand-in-hand with its values and culture, what its people find appropriate and acceptable. This is because each country has its own unique and innovative way of finding solutions to various problems and its own ways of executing those plans and implementing those ideas. The country also needs to keep in mind that while approaching various phases of dealing with a crisis, the outcome can be either positive or negative.
One of the most crucial aspects of fighting the global pandemic for Bangladesh would be ensuring food security. Initiatives need to be taken at the sectoral or microeconomic level where this is one of the most important aspects. As per the Food and Agriculture Organization (FAO), food security is at stake and that is because of mobility restrictions as well as a decrease in the general public’s purchasing power, affecting the country’s most vulnerable population groups. In this instance, Bangladesh needs to make sure that every centimeter of cultivable land is utilized by cultivating crops, including home yards and backyards. Moreover, local administration can acquire uncultivated land temporarily and contract them out for cultivation. Furthermore, the government can even plan on purchasing additional agricultural products other than the mainstream paddy/rice.
Besides food security, the government also needs to focus on diversifications and exports and their facilitation. As much as the RMG sector of Bangladesh is booming, the entire export sector is solely dependent on that with around 85% of the sector being dominated by the garments industry. Experts claim that this type of single item dependency cannot be sustained over a long period. Thus, it is an appropriate time for the government to prioritize diversification and emphasize other export-related industries such as pharmaceuticals, ship-building, agricultural products, and software. This can be identified by the use of diplomatic missions to identify certain products that have a growing demand in foreign markets, products that have export potential. National level task forces can be formed including the ministry of commerce, industries, livestock, fisheries, agriculture, and foreign affairs as well as research organizations and trade bodies in order to construct appropriate planning of the project’s approach and how it shall be implemented. Export diversification is especially of the essence in the current situation because RMG manufacturers have lost more than $3 billion in canceled orders by foreign buyers since the emergence of the pandemic.
Remember, every cloud has a silver lining. With a slower pace comes an opportunity for discovery and realization. There are gentler ways of finding potential in the pandemic. The social and emotional impacts of this lockdown will be felt even after people return to normal global health conditions. The country will emerge, albeit more slowly, from the unprecedented economic paralysis. If today is the sunset of bad times, there will be a sunset of good times. And once it all takes off, the sky’s the limit.