by Serajul Islam Quadir in Dhaka
The fear of a deep recession remain high as COVID-19 pandemic already affected millions of people across the world and measures to protect human lives are severely impacting economic performances.
It means that it will have a deep impact on the performance of economic growth across the world and will shrink expansion of economic achievements at least by 3 percent in the year as projected by the International Monetary Fund (IMF).
Obviously, it will be much worse than the previous two years – even less than the immediate past decade. The financial crisis will be beyond all imagination.
If the situation gradually improves, which is highly uncertain at this moment given the reality and fear for second wave, then the economic growth might be somewhere around 6 percent after being helped by political support and government measures.
The pandemic has pushed the economic activities across the world, more specifically, those of the developing economies to a near standstill.
The crisis highlights the need for an urgent action to cushion the pandemic’s health and economic consequences, protect valuable populations, and set the stage for a lasting recovery.
The countries have been imposing tight restrictions on the movement of people and transports to stop the spread of the infection. The death toll has been rising every day and there is no sign of relief, and the world is unfortunately waiting for a second wave in places where the number of infections has been gradually diminishing like China, Italy and some other European and Asian countries.
Thus the economic damage is already evident and represents the largest economic shock the world has experienced in recent times. On a longer horizon, the deep recessions triggered by the pandemic are expected to leave lasting scars through lower investments, an erosion of human capital through lost work and schooling, and fragmentations of global trade and supply linkage.
The pandemic will push most of the countries into deep recession in 2020, per capita income contracting in the longest fraction of countries globally since 1870. Advanced economies are projected to shrink 7 percent and it will have a large impact on emerging markets and developing economies. The economic growth is highly dependent on inter economic relations among the developed and developing economies. One segment of the developed economy helps the counterpart of the developing economies and vice-versa.
Due to lockdowns in recent past for an indefinite period the economic activities had been almost halted and its impact will be unbearable which may put a deep stain on the health of the country’s flourishing economy. The crisis has been crippling almost every aspect and segment of the economy. The situation is similar irrespective of nations – developed or developing economies.
The scenario of Bangladesh is not different. Oil producing countries have already started to feel the pain due to the sharp nose dive of oil prices across the globe. The Bangladeshi expatriates, who continue to send home money from these countries and support the foreign exchange reserves with strong foundations and have been considered as one of the back bones of the economy, are now becoming the direct victims. They are now being considered and treated as the burden of the family as well for the society around them. A similar picture has been observed in the export sector.
International Financial institutions like the World Bank, International Monetary Fund or Asian Development Bank delivered a commiserate forecast regarding the economic growth of the fiscal year of 2019-2020. According to their estimates the economy might grow less than 3.0 percent. We cannot ignore this prediction if we consider the full picture in and around our country. If the covid-19 continues to last long and if it spreads in a wide scale like the present wave, then obviously the economy will be shattered. The day labourers are the worst sufferers and victims of the situation.
The lives and livelihoods of these people now need active support from the government and policy makers.
According to the Bangladesh Bureau of Statistics (BBS) around 34 million or 20.5 percent of the total population of Bangladesh have been living below the poverty line. An analysis by Dhaka-based South Asian Network on Economic Modeling (SANEM) shows that this number might rise by 36 million if the income level for the poverty line is raised by 1.25 percent.
A good thing is that against this scenario the Bangladesh government has already announced financial incentives and packages for handling the situation and has been implementing different social safety net programmes.
But the main challenge is to reach the fruit to the targeted people without any form of malpractices. So it is the holy responsibility of the government machinery, mainly in the grass roots, known as local government, to ensure the implementation of these noble plans.