Saturday, 4 February, 2023


Corona’s Economic Impacts: Bangladesh In Focus

Corona’s Economic Impacts: Bangladesh In Focus

Right after the dawn hundreds of trucks are seen waiting in long queues on both sides of the roads. These trucks, full of crabs, have come from different crab farms of various coastal districts of southern region. Workers are supposed to unload and carry them to the 80 crab packaging centres of Uttara’s Nolbhog village (under Harirampur union) where staffs wash, grade, weigh and pack crabs. Following the completion of packaging, these packets of crabs are sent to Hazrat Shahjalal International Airport and from there these are exported to China, Hong Kong, Taiwan, Malaysia, Japan and USA. Except a few holidays it was a routine scenario of the packaging factories of Nolbhog. As the village is adjacent to the airport, it was the most suitable place for crab packaging. But when this correspondent visited Nolbhog last Saturday morning, the situation was completely different. There was no queue of trucks and the workers were not busy as well. Only 10-12 crab packaging centres were open and they hardly had any crabs to process further. Since the last week of January, when coronavirus outbreak halted exports, the number of work orders of these packaging factories has been reducing significantly. Therefore besides owners and staffs of these centres, some 450,000-500,000 people who are directly or indirectly involved in our crab industry have been passing a very tough time. According to Bangladesh Live and Chilled Food Exporters Association (BLCFEA), crab traders used to export 25-30 tonnes of crab every day and the sector earns around Tk 220 crore annually. This may be a tiny amount of money compared to the total export earnings of the country. But it clearly indicates that the traders and economy of Bangladesh are already affected by novel coronavirus or COVID-19.

Following the sudden outbreak of coronavirus, economists and businessmen across the world started estimating the probable consequence of this pandemic on the global economy. They have expressed their worries. Undoubtedly if the global economy suffers from it, economy of Bangladesh will not be spared as well. Rather as a rising economy with limited export variety it may face a serious crisis in the coming months. United Nations Conference on Trade and Development (UNCTAD) has predicted in its report that Bangladesh economy may lose USD 1 crore 70 lakh. Besides, the Asian Development Bank (ADB) said, Bangladesh’s gross domestic product may contract by as much as 1.1 per cent in the hypothetical worst-case scenario of a significant outbreak of coronavirus in the country. It means the novel coronavirus may wipe USD 3.02 billion off the USD 300 billion-plus economy. On the other hand, Bangladesh Trade and Tariff Commission has identified 13 sectors, including readymade garments, leather and leather goods, pharmaceuticals, jute yarn, electronics, sea fish and cosmetics, which may be affected most by the coronavirus outbreak, and envisaged that the country may count huge economic loss.

China is Bangladesh’s leading trading partner, with a USD 14.48 billion bilateral trade since the last fiscal year. According to data provided by Bangladesh Bank, in FY2018-19, Bangladesh imported goods worth USD 13.64 billion from China and exported products worth USD 831.2 million to the East Asian country. Bangladesh largely depends on China to import necessary raw materials as the country (China) sends 26.1% of the total USD 56 billion worth of goods that Bangladesh imports from around the world. Over 40% of our textile and textile-related goods and 30% of capital machinery are imported from China. It is the largest source of fabric for our readymade garment (RMG) sector. China has fought against COVID-19 well. The country is gradually trying to open its factories, but still it will need time to begin exporting raw materials and products. Thus the already opened letters of credit (LC) for importing raw materials from China has been affected. It will surely create adverse impact on RMG sector. Bangladesh also imports agricultural machineries, parts of mobile phones, televisions, refrigerators, motorcycles and other home appliances, fruits, and essential spices from China. Import of these products will also be disrupted.

The manufacturers related to export-oriented industry are feeling the pinch as the supply chain has already started suffering. Due to delayed arrival of imported raw materials they are struggling to deliver products timely. They are really concerned now, because they know that the buyers will not place new order to them if they miss the prefixed date of shipments. Yet they were becoming optimistic as China is making a comeback after recovering from the corona shock. But shift of the coronavirus epi-centre from China to Europe and spread of the pandemic to other Western countries have faded that ray of hope. Bangladesh’s economy is basically export-oriented. And the lion’s share of our export is limited to 10 countries. According to Export Promotion Bureau (EPB), in the 2018-19 fiscal year, Bangladesh earned USD 40.53 billion, of which USD 28.89 billion or 71.27% of the total exports came from the USA, Germany, the United Kingdom, Spain, France, Italy, Canada, Japan, the Netherlands and Poland. But all these major export destinations are now suffering from coronavirus outbreak. Thus consumption of different goods has reduced worldwide and with that the demands for our products from global buyers have fallen down.

Coronavirus is also taking a heavy toll on the service sector. Bangladesh has already announced embargo on international flights from some certain countries. Besides, the number of domestic flights has been reduced as the domestic passengers have stopped travelling because of the panic created over COVID-19 outbreak. As a result, both the government and private airlines are counting huge losses in their business. They will have to go through a long process to make up their loss. With 5-6 lakh foreign tourists every year, tourism is becoming a potential sector for Bangladesh economy. But it seems that our tourism industry has a tough time ahead. Several travel agencies and tour operators said many foreign tourists who thought to make trips to Bangladesh have already cancelled their plans. Besides, local tourists also have stopped making trips as the government has advised to cancel all non-essential travels. The number of foreign travelers will fall this year and if the crisis lingers and the epidemic spreads inside the country, the tourism industry will face serious setbacks. Luxury hotels, motels, resorts and restaurants are also suffering from the impact of coronavirus. Due to the scarcity of holidaymakers, owners of hotels, motels and resorts are struggling to meet their expenditure. 

In the last decade China has invested in Bangladesh’s power generation and mega infrastructure. A scheduled order of a coal-based power plant has been delayed as Chinese workers did not return to work in time. Apart from this power plant, thousands of Chinese engineers and labours are working in several development projects. Around 1100 Chinese nationals are involved in Padma Multipurpose Bridge Project. Besides, they are working in many other projects including Padma Bridge Rail Link, Payra Thermal Power Plant, Chattogram-Cox’s Bazar Railway Line, Karnaphuli Tunnel and Dhaka Bypass Expressway. Many of them went to their country to celebrate Chinese New Year, but following the COVID-19 outbreak their holidays have been extended. If these engineers and workers cannot return for a longer period of time, it will inundate the project work and delay implementation. And in that case, budget of these projects will be increased which will surely create extra burden on our economy.

Some economists have termed Bangladesh’s current expansion of economy as ‘jobless growth’ as around 0.9 million job seekers are added to the list of unemployed youths here every year. The situation may deteriorate if COVID-19 spreads in the country and the crisis lingers all over the world. According to ADB, in the hypothetical worst-case scenario of coronavirus outbreak in Bangladesh, 894,930 jobs will be lost from different domestic sectors! And the UNCTAD has calculated that around 875,000 Bangladeshi migrant workers will lose their work! In the face of COVID-19 outbreak about 500,000 migrant workers already have returned from different countries. Certainly a significant portion of them will not be able to join their work stations again. Financial sector, specifically the banking sector could play a vital role in backing the affected manufacturers and exporters. This is because banks were the heart of all crises. Banks stood strong during the sovereign euro crisis and the global financial crisis. But currently banks are busy with their own problems. That is why it will be difficult for them to support the businessmen. If they fail, the Small and Medium Enterprises (SMEs) will be more affected and make more people jobless.

The actual dimension of the disaster will depend on how long the epidemic will last and when the global export-import will return to normalcy. But till then Bangladesh cannot remain quiet. The government needs to conduct a holistic research immediately involving economists to estimate COVID-19’s impact on our economy. Like other countries, it has to assist the traders of affected sectors and take short and long-term policy so that our economy and people can recover the loss caused by the outbreak of the pandemic.