Md Mazadul Hoque
Bangladesh, with over 160 million people, is set to face economic recession if novel coronavirus continues to spread rapidly. Currently, leading economies in the world are fighting against much the discussed outbreak known as COVID-19 to survive. The death toll and number of COVID-19 infected people are rising alarmingly.
Already worst hit countries created fund of billion dollars to tackle the deadly virus that was originated at Wuhan in China in the month of December of outgoing year. The virus proves itself as very much contagious and is quickly spreading from man to man claiming hundreds of lives a day. The virus indicates that it is going to destroy major economic indicators of affected countries shortly. The growth pace of Bangladesh economy appears to have halted shortly after the outbreak.
Among COVID-19 infected countries, Bangladesh has been caught with fast spreading virus in the beginning of March this year. But, the country economically started facing untold sufferings after the virus had originated in China in December last. China, being the largest trading partner of Bangladesh since long, trade services operation with China remains standstill till now. The second largest economy- China also known as major a exporting country had been dominating us in respect of supplying raw materials to a great extent.
A wide range of trade activities with trading partners remains scattered recently as a result of COVID-19 outbreak. Bangladesh economy has largely been affected because to produce garment items, raw materials from other countries have to be imported. The economy also is in threat in face of incoming expatriates.
It is essential to say that the expatriates in great number have flown to Bangladesh with whatever they had in their hand. The countries affected with novel coronavirus are failing to control Bangladeshi citizens who are staying there for earnings as workers.
Our economy mainly takes pride in getting foreign remittance that comes from Middle Eastern countries, USA, UK and Italy. These countries are now struggling to save its people from virus. The central bank has resumed sale of the US dollar (US$) to banks directly for offsetting extra pressure on the market, caused by lower remittance inflow following ongoing coronavirus outbreak. Bangladesh received $1.18 billion remittance from March 1 to March 24.
It was $1.45 billion in February 2020. To meet the growing demand for US currency in the market, the central bank has so far sold $529 million in FY 20 to the banks. Bangladesh Bank (BB) sources said a total of 59,139 people went abroad in February this year and sent $1452.20 million to Bangladesh as remittance where 69,988 workers in January and contributed in our economy by sending $1638.43 million.
Diversifying exportable products in recent years had been one of key initiatives since we, being import-dependent country, have to make import payment in due time. To pay import payment, there is no alternative to scale up export earnings. But, our major export destinations- USA, UK, and Germany among others have been infected with coronavirus.
So, export orders made earlier are now facing uncertainty though our apparel leaders are going on negotiation regarding shipping the already ordered apparel items. The work order situation is truly vulnerable. Some 969 factories reported $2.68 billion worth of export orders were cancelled and held up by global buyers affecting more 1.94 million workers. Some 38 garment owners shut their units due to coronavirus pandemic
Needless to say that labour – intensive export oriented sectors that employs more than 4 million workers are worst hit by recent pandemic. Speaking with a heavy heart that export growth fell by 5.31 per cent to $22.36 billion in the July –January period of current fiscal year, 2019-2020 from $23.61 billion in same period of FY19.
On the other hand, import growth dropped by 4.43 percent to $ 32.00 billion from $33.49 billion. Bangladesh export earnings fell by 4.8 per cent in the first eight months of current fiscal year-to $26.24 billion from $27.56 billion in the same period of prior fiscal year. That should be explained here that February month of current fiscal year saw $3322.4 million but in July the export was recorded was $3887.9 million.
There is a possibility of losing jobs in Bangladesh to a great extent amid COVID-19 outbreak. Already International Labor Organization (ILO) projected that more 25 million people are going to lose jobs globally due to coronavirus crises. As a lower middle income country, Bangladesh economy proves her failure to keep millions people employed in the wake of any natural disaster.
Garment owners, in the meantime, are bound to shut down their factories in finding no export orders from foreign buyers. Nearly 50 factories closed their operation. Salary and wages to the regular workers would be disbursed in due time- the owners confirmed. It needs to noted that in 2008-2009, global financial crises increased global unemployment by 22 million- ILO said.
What is worrying is that budget deficit in Bangladesh is widening. To minimize the gap, tax revenue is the only source apart from other sources. According to a published report in a daily, budget deficit in Bangladesh that stood at Tk 402 billion in the first six months to December would widen further in the aftermath of pandemic. The government placed a budget of Tk 5.23 trillion for the current fiscal year, posting a deficit of Tk 1.4 trillion.
Nevertheless, tax receipt is now set to shrink drastically since the corporate houses and business have been brought under lockdown. Between July and December, the total expenditure amounted to Tk 1,621 billion, compared with revenue receipt of 1,219 billion. BB sources said around 19012.90 crore tax earnings recorded in January of current fiscal year and December month saw 22352.67 crore.
Over 64 million people working in informal sectors are at risk of death since they will never survive with their blue collar jobs amid this unexpected situation. Their fate has become uncertain. They are the real heroes to push the economy, no doubt.
India has made a task force for battling the economic impact COVID-19 pandemic, led by the finance minister (Source: The Economic Times). A total 199 economies in the world are now experiencing COVID-19 where death toll rises over 34000 among 0.7 million infected people as on March 30. So, it may be predicted that economic activities are on decrease worldwide resulting in recession situation sooner or later.
Against the backdrop of on-going crises situation, internal resources might have been utilized in right ways. Wishing to get external aid in this moment is nothing but a dream. We have to make strong commitment to survive anyhow on this land with limited facilities whatever Bangladesh economy gives us.
If such situation continues longer period, food deficit may appear since production in farm sectors started facing difficulties in absence of required number of labor force and agricultural equipment. Launching Social Safety Net Program is a must. Otherwise, day laborers in villages would remain unfed.
Low income group people must be brought under Vulnerable Group Feeding program. A fund titled “Coronavirus Fund” with available cash money might help the people wishing to have one day meal. I think bailout package for the borrowers might not bring any fruitful results for our economy.
Rather, stimulus package declared by the government should go to the region where nearly 50 percent people live from hand to mouth. The poor landless people with no education deserve bailout package. The city area people who depend on daily income must be included in the package until the situation improves.
Our visionary government, in last ten years, left no stone unturned to take the country ahead with attaining all goals set by the government shortly after coming in power. The country got the prestigious status recently to become a developing country. The economy now receives nearly $20 billion remittance. Export earnings surpassed over $30 billion. So, the nation will see no bad situation in the aftermath of COVID-19 outbreak.
There are no reasons to be worried. There are many reputed business conglomerates that keep enormous capacity to feed thousand people daily. The move, under Public-Private Partnership (PPP) program is to be confirmed to battle economic recession in the days to come. There needs to be economic relations with world’s largest economies to expect financial and food aid if needed.
Md Mazadul Hoque is a banker and analyst of economic affairs. E-mail: mazadul1985@com.