The government is finding it very challenging to maintain the level of domestic demand due to the people’s eroding purchasing powers amid the shutdown extended to tackle the coronavirus pandemic.
Economists said the shutdown since March 26 made most of the country’s 6.1 crore labour force jobless and forced thousands of small and medium enterprises, the main driving force of the economy out of production.
The shutdown has already surpassed the impacts of protracted blockades of 2014 and 2007.
The unprecedented shutdown also resulted in halving the country’s GDP growth, rattled the demand and supply chains and created huge unemployment, they said.
Banning all modes of transports across the country also rendered thousands of workers unemployed, said the worried economists
They called the Tk 5,000 crore stimulus fund announced for the export oriented sector and distribution of food assistance at subsidised prices as far from enough to overcome the economic crisis.
Former Bangladesh Bank governor Salehuddin Ahmed said the central bank should immediately increase money supply using its instruments to assist the affected economic sectors.
The government should suspend the implementation of less important projects and use the fund to help the people increase their purchasing power, he said.
London-based Economists Intelligence Unit has already warned that Bangladesh’s gross domestic product growth would slow down to 3.5 per cent in the current fiscal due to the coronavirus impact against the projection made by the government in June 2019 that the country was set to achieve 8.2 per cent growth in fiscal 2019-20.
The closure of factories and businesses resulted in a supply-side shock and the subsequent layoffs will exacerbate the demand shock, said the EIU.
The Asian Development Bank has projected that the Bangladesh economy might lose 1.10 per cent of its GDP, or $3.02 billion, in addition to 8.95 lakh job losses due to the coronavirus pandemic.
Former finance secretary Mohammad Tareque said the economy would face multi-dimensional impacts which would exceed what the nation faced during the Liberation War.
He said that coordinated efforts that was made by Bangladesh to offset the impacts of the 2008 global recession was missing now.
The government should involve all irrespective of opinions to face the current crisis, said Tareque, now working as director of the Bangladesh Institute of Governance and Management.
The adverse impacts of the coronavirus has hit when almost major economic indicators- -exports, imports and revenue income - excepting inflow of remittance were in negative trend.
As major sources of remittance in Middle East have been also hit by the pandemic, the country received 11.83 per cent less remittance to $1.29 billion in March 2020 from $1.46 billion in March 2019.
Centre for Policy Dialogue distinguished fellow Mustafizur Rahman said the falling remittance was a big blow for the resource short country, also facing capital flights.
He said revenue generation would go down further and handicap the government’s options to run stimulus package for the affected sectors.
He calculated that the government would need fund close to the size of the current budget to match with the stimulus package announced by developed countries.
In an article ‘Coronavirus is coming for the world’s poor’, the World Economic Forum said that the least developed countries lacked the economic resources and medical infrastructure to tackle the current crisis.
Bangladesh Institute of Development
Studies director general Khan Ahmed Sayeed Murshid said that the current crisis and its economic impacts would be higher than the past politically enforced road blackades.
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