The financial year 2020-21 begins today with the coronavirus pandemic-induced unprecedented uncertainties on the economic front with rising poverty and unemployment, slowdown in production and consumption as well as risks to life and livelihood, experts and economists said on Tuesday.
People losing income and employment may go through an unbearable misery as they may require spending their savings and selling assets to survive in case of the government’s failure to contain the coronavirus outbreak, they warned.
Containing the coronavirus outbreak through prudent management in health system will be the prime challenge for the government to ensure smooth recovery of the country’s economy devastated by the pandemic-induced shutdown and lack of confidence of both consumers and investors, they said.
In addition, providing adequate food and financial support to vulnerable people and helping micro, small and medium enterprises (MSMEs) to survive will be the pre-condition of the overall recovery of economy, they added.
Several studies conducted by local think tanks Centre for Policy Dialogue, South Asian Networks on Economic Modeling and the Citizen’s Platform for SDGs, Bangladesh have already revealed that a millions of non-poor people have become vulnerable to poverty losing jobs and income while inequality in terms of income and consumption has increased significantly.
According to the studies, Some 20.4 per cent or 3.60 crore non-poor people have become vulnerable to falling under the poverty line taking the country’s overall poverty rate to 40.9 per cent, higher than the poverty rate in 2005, due to the adverse impacts of coronavirus outbreak.
Now 3.40 crore or 20.5 per cent of the population are poor in Bangladesh, according to the Bangladesh Bureau of Statistics.
Around 2 crore employed people are at risk of losing employment and income.
Income inequality, measured by Gini coefficient, might increase to 0.52 in 2020 from 0.48 in 2016 while consumption inequality is feared to rise from 0.32 in 2016 to 0.35 in 2020, according to the estimates.
SANEM executive director Selim Raihan told New Age that containing coronavirus, providing livelihood support to poor and implementation of stimulus packages would be the major challenges for the government.
‘Economic recovery will depend on how the government can address the issues, mainly controlling the outbreak,’ he said.
He said that production and consumption experienced a huge shock in the period when thousands of employed people lost their income and jobs and non-poor became poor or vulnerable to becoming poor, he said.
The situation of poverty, unemployment and inequality will worsen if the government cannot contain the outbreak, he said, adding that it would also create social problems, including increase in crimes, violence and other social disorders.
So, the implementation of stimulus packages and other commitments to revive the economy and save life and livelihood should be the utmost priority, he said.
He also apprehended that private investment might remain stagnant due to lack of finance from the banking sector which had been overburdened with implementation of the stimulus and possible government borrowing.
Poverty, inequality and employment should be the primary areas of the policy focus for economic recovery, he said.
World Bank consultant Zahid Hussain said that the country entered the new fiscal year with huge uncertainties had even gone through.
All the other issues, including economic recovery, would become a secondary matter if the root cause of the uncertainties, coronavirus outbreak, could not be contained, he said.
Both local and global consumers stopped spending on non-essential items while investors suspended expansion plan or shrank production due to lack of confidence amid the situation and uncertainties about when everything will come to normalcy, he said.
‘In this situation, the main challenge for the government is to contain the outbreak through efficient management to give back confidence to consumers and investors as a pre-condition of economic recovery,’ he said.
The economy may reach a level of rebound within six months if the government can contain the outbreak, he said.
But the actual recovery will depend on whether the government takes all necessary measures to ensure livelihood for mass people and support to MSMEs to survive as the sectors are the largest source of employment and pipeline of raw materials for large industries, he said.
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