With the cancellation of orders around $2.58 billion of RMG products by foreign buyers, halt in most economic activities and decline in remittance flow, experts also warned that the country’s fast-growing economy and growth brace for serious fallout that cannot be tackled without proper strategies and an effective economic diplomacy.
The economists highly appreciated Prime Minister Sheikh Hasina for announcing a bailout package of Tk 5,000 crore for the struggling export-oriented industries to overcome the coronavirus impact, and said such support should also be given to other sectors, especially the informal one.
Former caretaker government finance adviser Dr AB Mirza Azizul Islam said coronavirus is wreaking a havoc on the country’s economy and its channel of transmission is RMG, tourism, remittance, transport and informal sectors.
“It’ll increase unemployment, decrease the poverty reduction rate and overall production. Low-income people will be affected badly. The Asian Development Bank predicted that Bangladesh’s GDP growth will be affected. The actual ramification will depend on the extent and length of the coronavirus prevalence, and action plans to recover the finical damage,” he said.
Mirza Azizul said the Prime Minister announced a stimulus package of Tk 5,000 crore for the RMG sector and that is good, but specific plans should be spelt out for the informal sector which shares 85 percent people of the total employment in the country.
He said the government must widen the social safety net with adequate allocation as the low-income group of people is becoming jobless. “Besides, proper strategy and plans needs to be taken to contain the virus and tackle its fallout.”
Executive Chairman of Power and Participation Research Centre (PPRC) Hossain Zillur Rahman said three types of people will suffer huge economic losses due to the coronavirus attack. “One group is whose products are fully dependent on foreign buyers, the second group whose supply chain relies on imported raw materials-- machinery-- from abroad, and the third group is whose livelihoods depend on internal demands, and this the largest affected group.”
He said the RMG sector is facing a tough time and this problem should be resolved. “But, there’re lakhs of people in the informal sector and it should also get proper attention.”
The PPRC chief said the country could not prepare well in advance to contain coronavirus. “We shouldn’t make the same mistake in the face of a potential economic crisis in the days to come. We need to determine what kind of support can be provided in the specific sectors. It can be financial incentive or policy support.”
He said they are conducting a research to estimate the probable fallout of the coronavirus and put forward recommendations to overcome those.
Former lead economist at the World Bank Dr Zahid Hussain said the coronavirus has started affecting Bangladesh’s some business sectors while some sectors will witness unpredictable impact in the days to come.
“We’ve already seen the impact on some specific sectors, including RMG, health, tourism and other services sectors. The impact will be seen in other sectors soon, too. Actually, all the finical sectors will suffer more or less due to the coronavirus.”
The noted economist said the country’s export earnings will face a serious setback since many markets, including that of the UK and the USA and the UAE, remain shut now. “The country’s RMG export is already in the negative trajectory. A big impact will fall on remittance, too.”
Zahid said different international organisations may provide the country fund to meet coronavirus impact and the government should take programmes as preparation to use that money properly.
Dr Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), a private think-tank, said Bangladesh will face both domestic and external impacts of the coronavirus.
“The national economy will face a slowdown and lose its pace if the current situation prevails for a long time. Our revenue shortfall can deepen further while the export earnings will drop drastically due to the coronavirus,” he said.
Stating that Bangladesh’s economy is under a serious threat due to the COVID-19, International Chamber of Commerce, Bangladesh (ICC,B) President Mahbubur Rahman urged the policymakers to work out a proper strategy to overcome it.
The veteran business leader said Bangladesh’s export earnings fell by 4.8 percent in the first eight months of the current fiscal year-- to $26.24 billion from $27.56 billion in the same period of the prior fiscal year -- and this downward trend might aggravate in the coming months in the face of wholesale cancellation of export orders.
“Thus, Bangladesh’s economic activities may hinder because of direct impact on production, supply chain and market disruption as well as impact on firms and financial markets,” Rahman added.
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Rubana Huq said, “The work order situation is very vulnerable. Some 954 factories reported 822.91 million pcs worth $2.65 billion export cancelled/ held up affecting 1.94 million workers. The situation might worsen.”
She thanked Prime Minister Sheikh Hasina for announcing a stimulus package of Tk 5,000 crore for the export-oriented industry to overcome the coronavirus fallout.
Rubana said they spent sleepless nights worrying about the fate of the workers. "Limitless gratitude to you (PM) for giving us this support at a critical time when orders stand cancelled and we face uncertainty.
She said the money will be used for providing the salaries and wages of workers and employees only.