We cannot rebut the fact that the recent outbreak of coronavirus has palpably speared a sense of panic amidst millions of people across the globe. Reports on how the Covid-19 outbreak is affecting supply chains and disrupting manufacturing operations around the world are increasing daily and it is already threatening to hurt the world financial system including ours.
However, against this backdrop, the finance ministry has instilled some hope saying that the country would not face much difficulty in attaining its GDP growth target of 8.20 per cent for this fiscal year, according to a report prepared by the finance ministry. But there are possibilities that the supply chain disruption due to virus outbreak would have a significant repercussion for intra-regional trade in Asia Pacific including Bangladesh.
There could be a quick bounce back if the virus is seen to be contained, but with dire manufacturing data already out this weekend from China, markets probably have to fall further before they finally turn. We are told that the strong growth in the flow of remittance will contribute to furthering of domestic demand, said the finance ministry document.
As most of our industries import raw materials
from China, alternative sources should be
actively considered in no time
Besides, the increased public expenditure under the annual development programme, the implementation of mega projects and increased investment owing to setting up of economic zones will have positive impact on the macroeconomic indicators. As a result, the GDP growth rate will maintain the current momentum. However, there are many more issues that should be taken into consideration to safeguard Bangladesh’s from the grip the pandemic.
China is the biggest trading partner of Bangladesh and the biggest source for raw materials. The world's second largest economy accounted for more than a fifth of the country's imports of $56 billion in fiscal 2018-19. No doubt, the barriers to imports from China, the epicentre of the virus, will hurt the export-oriented sectors and disrupt the supply chain. At the same time, it will have a negative impact on inflation.
Most of the important construction materials are also sourced from China and majority of the suppliers are based in Hubei Province. As a result, the regular flow of imports of construction materials has been interrupted as many Chinese factories have closed their operations and the number of import vessels has dropped.
In this critical situation, our manufactures are in deep fear as to when China may reopen completely. Many Chinese companies might miss the lead time to ship goods on time and that will certainly harm our local industries. However, as most of our industries (garments, steel, cement, plastic, electronics, food and medicine) import raw materials from different areas of China, alternative sources should be actively considered in no time.
