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Bangladesh poverty rate rises to 35pc amid COVID-19 fallout: CPD

CPD estimates GDP growth to be 2.5pc

Staff Correspondent | Published: 13:07, Jun 07,2020 | Updated: 12:44, Jun 08,2020

 
 

Bangladesh’s national poverty rate rose to 35 per cent in 2020 from 24.3 per cent in 2016 due to the adverse impacts of the coronavirus pandemic, according to an analysis of the Centre for Policy Dialogue.

Both income and consumption inequality, measured by Gini coefficient, also increased in the country, the independent think-tank stated in its flagship report ‘The State of Bangladesh Economy’ released on Sunday in a virtual press briefing.

The CPD also said that the country’s GDP growth rate would at best be 2.5 per cent in the current fiscal year 2019-2020, the lowest in 32 years, due to the coronavirus fallout.

The previous lowest GDP growth rate was 2.6 per cent in FY1989, according to the government data.

The government has set the target of GDP growth at 8.2 per cent for the current FY2020 against the 8.15 per cent achieved in the previous FY2019.

The CPD has carried out the analysis to explore short-term implications of the COVID-19 prevalence on poverty and inequality in Bangladesh using the unit-level data of the Household Income and Expenditure Survey (HIES)-2016.

The analysis has applied negative shocks on household consumption in the range of 9–25 per cent among various household groups and found that it leads to an increase of national (upper) poverty rate to 35 per cent in 2020.

The CPD said that income inequality, measured by Gini coefficient, might increase to 0.52 in 2020 from 0.48 in 2016.

In the same timeframe, consumption inequality, also measured by the Gini coefficient, is expected to rise from 0.32 in 2016 to 0.35 in 2020.

Currently, the country’s 3.40 crore, or 20.5 per cent, of the population is poor, according to the Bangladesh Bureau of Statistics.

The disruption of economic activities has led to loss of employment, leading to decline in income for a large section of population, the CPD noted.

‘The GDP growth in the FY20 is likely to dip to about 2.5 per cent, in the most optimistic scenario, if further general holidays are not announced or stricter measures are not enforced during the rest of the days of the fiscal year,’ according to the CPD analysis.

In this context of the coronavirus pandemic, the CPD said, the focus of the economic policies should be on saving lives of people and reducing the vulnerabilities of the marginal groups.

The government should attach utmost priority to four sectors — health, social protection, agriculture and employment — in terms of allocation in the next budget scheduled to be placed before the Jatiya Sangsad on June 11, it said.

Poverty, inequality and employment should be the primary areas of the policy focus for economic recovery, according to the analysis.

The CPD said that the GDP growth at the projected rate was not so bad considering the global situation as the countries across the globe — developed, developing and least developed — were experiencing lower, even negative growth rates.

CDP executive director Fahmida Khatun said that the government, instead of the usual budget composition and without focusing on the GDP growth rate, should attach importance to saving people’s lives.

The allocation for health should reach at least to 2 per cent of the GDP from the current 0.9 per cent while that for the social safety net programmes should be at least 3 per cent of the GDP, she said.

It is critically important to review the current state of the pandemic spread and take a phased approach, she went on, to allow movements and economic activities as the decision to reopen economic activities was not based on proper planning and preparations.

Economic recovery won’t be possible if the virus spread continues, the CPD analysis said.

Fahmida said that the economy had already been crippled and any unplanned steps would do further damage.

CPD distinguished fellow Mustafizur Rahman, research director Khondaker Golam Moazzem, senior research fellow Towfiqul Islam Khan, among others, spoke in the briefing.

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