The coronavirus pandemic took the world by storm in 2020. Economic systems are still in disarray, especially in emerging countries. Bangladesh is one of the said countries to have suffered multiple blows courtesy of Covid-19. Reduction in exports, declining remittances and the economic slowdown are all testaments to this fact. How these economic fronts suffered requires further elaboration.
One cannot talk about Bangladesh’s exports without mentioning its Ready-Made Garments (RMG) sector. Accounting for nearly 80 per cent of total export earnings, RMG trade came under threat from canceled orders and deferred payments. As a result, RMG export earnings fell by almost 18 per cent in FY 2020. In comparison, Vietnam had a mere 3 per cent fall in the same category and regained the title of ‘second-largest RMG exporter in the world’. Can Bangladesh stage a comeback in this regard is a big question One thing is for certain; export diversification is necessary to reduce reliance on the RMG sector and increase export earnings from other avenues.Likewise remittance, another major contributor to the Bangladeshi economy, took a hit as well. 2020 saw only 0.18 million workers fly abroad in comparison to the 0.70 million from the previous year. The present equation is simple; lower migration equals lower remittances in the immediate future. Although there was a record-setting influx of remittance last year, the situation is far from perfect. This sudden spike can be attributed to the collapse of the hundi system and the two per cent government incentive to remit through official channels. Additionally, many of the 0.33 million returnees in 2020 closed shop and brought back their life savings from abroad. With a depleted pool of Bangladeshi expatriates, will remittances bounce back to pre-pandemic levels is another big question.
Speaking of pre-pandemic times, Bangladesh was cruising with a GDP growth rate of 8.2 per cent at one stage. In sharp contrast, the forecast for the same metric is 4.4 per cent in 2021. It is safe to say that Covid-19 put the economy in dire straits last year. As a countermeasure, the government imposed a countrywide lockdown to contain the novel threat. Job losses, closure of businesses and rising poverty soon followed suit. However, even in the midst of dismay, there are some silver linings to address. Among South Asian economies, Bangladesh’s current GDP growth forecast is fourth only to the Maldives, India and Srilanka. Furthermore, in proportion to the GDP, the country’s stimulus package is the third highest among the same segment. Credit must be given to the Government of the People’s Republic of Bangladesh for attempting this rescue act.
The current projections suggest that Bangladesh will be able to achieve a GDP growth rate of 7.3 per cent in 2025. The slow albeit steady recovery has begun and the Bangladesh economy is poised to make a comeback. After all, history is proof that the indomitable spirit of the Bangladeshi people can overcome any odds.
Kazi Turin Rahman is an MBA from Coventry University, UK