The Asian Development Bank on Wednesday said that the second wave of Covid outbreak might erode at least 1 percentage point of Bangladesh’s potential gross domestic product growth in the current fiscal year 2020-2021.
‘The economy was showing signs of recovery with higher remittances, exports and other indicators, but the recent surge in pandemic and the lockdowns are likely to trim our GDP growth projection of 6.8 per cent for FY2021 by at least one percentage points,’ ADB country director Manmohan Parkash said at a virtual press briefing.
GDP growth in FY2021 is expected to be moderate from the earlier estimate of 6.8 per cent to a range of 5.5-6 per cent due to the resurgence of Covid cases, he said.
Manila-based multilateral lender organised the briefing to release its latest Asian Development Outlook 2021.
Earlier on March 31, the World Bank predicted 3.6 per cent GDP growth for Bangladesh in FY2021.
Bangladesh economy grew by 5.24 per cent in the last FY2020 while the government projected 8.2 per cent growth rate for the current FY2021.
The government, however, has already revised down the projection to 7.4 per cent and set to make further cut in projection to 6.1 per cent due to an adverse impact of Covid outbreak.
Bangladesh coped up reasonably well against the pandemic and economy showed early signs of recovery, Parkash said, adding that the commencement of the vaccination drive in February 2021, together with the improved global economic conditions and trade, and employment, helped the economic recovery.
The measures, including lockdown and travel restrictions, taken to control the spread of infection will adversely affect livelihoods and will slowdown economic recovery, he said, adding that the impact of the second wave in export-destination countries could also undermine the recovery.
In the ADO, the ADB initially projected Bangladesh’s economic growth based on data available up to March 31, 2021 and the economic impacts of the ongoing second wave of Covid-19 was not considered in the outlook.
According to the report, the growth is expected to pick up in FY2021 with stimulus package implementation and recovery in global growth and world trade.
Continued healthy remittance inflows will likely keep domestic demand buoyant and underpin solid growth in private consumption, it said.
Private investment is expected to pick up as moderate growth in the private sector credit improves confidence while public investment in large projects would boost growth.
Similarly, growth in agriculture, services and industry is expected to continue.
The outlook is subject to downside risks and resurgence in Covid cases and delays in availability in the supply of vaccines, both globally and domestically, could undermine the economic growth outlook, it added.
Parkash said that Bangladesh economy had withstood the impacts of the first wave of the pandemic with timely and effective stimulus measures, ensuring basic services and commodities for the poor and vulnerable.
‘The economy is now going through the second wave and the future growth will depend on how effectively it is managed,’ he said.
Under sustained global recovery and effective Covid management, GDP growth is expected to further strengthen to 7.2 per cent in the next FY2022, the ADO projected.
Parkash also said that Bangladesh might get $940 million loan from the ADB to procure Covid-19 vaccines.
According to the report, promoting effective and affordable universal primary health care is essential for inclusive and sustainable development.
Healthcare coverage and quality in Bangladesh suffers from lack of public funding and ineffective administration while high out of pocket expenditure characterises the healthcare spending in the country, it said.
Out of pocket expenditure was 73.9 per cent of total health expenditure in 2018, it said.
A contributory and individually mandated social health insurance scheme should be a key priority to achieve the universal healthcare the government is planning for.
ADB senior economist Soon Chan Hong presented the summery of the ADO and the Bangladesh economy at the briefing.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Miscellany