Dhaka Courier

Economy looks to get past a year of damage control

Prime Minister Sheikh Hasina addresses a meeting of the National Economic Council (NEC) virtually from her official Ganabhaban residence in the capital on Tuesday, December 29, 2020. Photo PID

The outgoing year 2020 was of course one marked humanitarian catastrophe due to the coronavirus pandemic, and its associated economic costs meant the challenge for policymakers became one of damage control as almost no-one could completely avert its disastrous effects.

Economists are hopeful that 2021 will be the year to turn things around.  Employment generation, revenue collection and increasing investment would be the main avenues through which the economic rebound has to be channelled.

The experts suggested the government should ensure good governance, focus on infrastructure development, increase private and foreign investment, enhance institutional capacity, reform policies and create skilled manpower to tackle the Fourth Industrial Revolution.

Bangladesh’s laudable gains in food supply during the pandemic when many developed countries are suffering, should provide the emphasis to reduce inequality as Bangladesh celebrates the 50th anniversary of its independence in 2021.

Talking to UNB, Distinguished Fellow of Centre for Policy Dialogue (CPD) Professor Mustafizur Rahman said Bangladesh passed 2020 through humanitarian catastrophe and economic disaster due to the COVID-19 pandemic.

“The government must ensure good governance, lay emphasis on infrastructure development, increase individual and foreign investment, enhance institutional capacity, reform policies, and pay attention to healthcare,” the noted economist suggested.

He added that employment generation, raising revenue collection and increasing investment will emerge as challenges for the country in 2021.

“The government announced stimulus packages for different sectors but it was not enough to overcome the crisis and go back to the position pre-Covid-19. The pandemic posed an impact on lives and livelihoods. Bangladesh performed well in food production amid the crisis too,” Prof Mustafizur also said.

Covid-19 pandemic and Lock down period

Bangladesh government announced lockdown from March 26 to May 30 in phases to prevent the spread of Covid-19 after getting the virus infected patient on March 8 in the country.

But the country’s educational institutions have been closed since March 17 due to the outbreak. The current closure of the institutions except Qawmi Madrasa has been extended till January 16, 2021. However, the students under PSC, JSC, SSC and HSC levels are promoted without final exams due to the pandemic.

Bangladesh confirmed the first death of COVID-19 on March 18, 2020. The country’s death toll rose 7,509 and the number of cases went up to 5,11,000. More then, 4,55,000 covid-19 patients have recovered, according to Johns Hopkins University CSSE Covid-19 data on December 29.

New Poor in Bangladesh

The pandemic leads to an increase of national (upper) poverty rate to 35.0 percent in 2020 from 24.3 percent in 2016, according to CPD.

Bangladesh Institute of Development Studies (BIDS) survey said the impact of Covid-19 will drive 16.4 million new poor in 2020.

Remittance inflow

Although Bangladesh performed well in remittance earnings amid the coronavirus fallout, the country may see decline in remittance inflow in 2021 as the outflow of workers abroad came down drastically in 2020.

Refugee and Migratory Movements Research Unit (RMMRU) founding chairman Professor Tasneem Siddiqui said though remittance inflow increased by 17 percent this year amid the pandemic over the last year, it will decrease in the next year. The migrant workers sent $19.69 billion dollar remittance upto November.

“The remittance has increased this year as it came through a formal channel instead of hundi during the pandemic period. Besides, gold smuggling also came down. Another reason is many migrants sent money fearing job losses,” she added.

“Some 3,26,758 migrants workers returned home in April 1 to November 30. Around 4,00000 workers have been destitute and their families fell at risk due to the pandemic,” Tasneem also said.

Professor Tasnem added around 7 lakh Bangladeshi workers went abroad with jobs last year. But only 183,682 could go abroad for employment this year.

Meanwhile, Finance Minister AHM Mustafa Kamal said the Bangladesh’s foreign exchange reserve crossed $42 billion on December 15 despite the struggle against the pandemic situation. However, much of the increase was also caused by depressed demand leading to fall in imports.

Garment sector

The garment sector is a key driving force of Bangladesh’s economy. It was not closed amid the pandemic situation to keep run the economic wheel. Even, the government provided Tk5000 crore to provide wages for RMG workers.

President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Rubana Huq recently demanded a fresh round of stimulus package from the government to cope with the deep fallout of the Covid-19.

Sources said several hundred small-and-medium garment factories were closed while thousands workers lost their jobs due to the pandemic. The sector faced order cancellations and delays worth about $3.18 billion in March to April of 2020.

Now, the Bangladeshi exporters fear to lose around $4 billion if the European Union (EU) ends the duty-free trade opportunity for the country due to its LDC graduation to a developing nation.

Dr Rubana said the 2020 was an alarming year for them.

Kitchen Market situation in Dhaka

The price of coarse rice increased 47.69 percent a kg, medium 25.56 percent and fine one went up 20 percent compared to previous year, according to the state run Trading Corporation of Bangladesh (TCB)’s data on December 30.

The data also mentioned that each litre loose palm oil price increased 28 percent and supper one 27 percent, and loose soybean rose 24.14 percent.  Besides, per litre bottled soybean increased 14.29 percent while five litre bottled soybean went up 16.23 percent over to last year.

Meanwhile, each kg potato price increased 47.27 percent while lentils (medium grains) rose 21.43 percent and large one went up 17.39 percent compared to previous year, TCB data also showed.

Embracing Digital

All official and business activities have enhanced digitally thanks to the pandemic.

General Secretary of E-commerce Association of Bangladesh (e-CAB) Muhammad Abdul Wahed Tomal said their e-commerce business volume increased several times in the pandemic period.

“Not only e-commerce business rose but also mobile transaction, e-learning, payment and medical caring (telemedicine) improved vastly thanks to technology during the pandemic,” he added.

Government initiatives

The government outlined a stimulus package worth Tk 130,000 core to keep the economy afloat. Of the amount, some Tk 17,000 crore was spent for a total of 20 packages and Tk10,000 crore was allocated for vaccine of Covid-19, according to Finance Ministry reports.

The stimulus packages include export-oriented industries, small, medium and cottage industries, agriculture, and cash for poor, etc.

Meanwhile, the government on Tuesday approved the 8th Five-Year Plan projecting ambitious targets of 1.13 crore new jobs with average 8 percent economic growth yearly.

Senior secretary at General Economics Division of the planning ministry Dr Shamsul Alam said 32.5 lakh would be created abroad out of the projected 1.13 crore new jobs. “We believe on data provided by Bangladesh Institute of Development Studies to project the poverty reduction to 15.6 percent by 2025 from 20.5 percent in 2019,” he added.

Dr Shamsul also said the plan is combined with the Sustainable Development Goals between 2021 and 2041. Besides, good governance and addressing mismanagement in the financial sector also laid emphasis in the plan.

Planning Minister MA Mannan said they gave special attention to the COVID-19 fallout in the 8th Five-Year Plan to overcome its socioeconomic impacts.

  • Bangladesh Institute of Development Studies (BIDS)
  • Centre for Policy Dialogue (CPD)
  • Pandemic
  • Lockdown
  • Covid-19
  • Coronavirus

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