Submitted by:
Name: Kazi Abdur Rahman Rafi
Roll: 3932
TERM
Batch: 56D
Bachelor of Business Administration
PAPER
World university of Bangladesh (ECON-701)
Subject: Economy of Bangladesh
FOR FINAL
ASSIGNME
Submitted to:
Shabuz mahmud NT
Assistant professor
Dept. of Business Administration
World university of Bangladesh
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Abstract
The whole globe is going under a devastating threat of economic depression
amid impact of COVID-19 pandemic. Almost No country can deny the fact
propelling to the economic ramification of this diseases suggesting a confirmed
apropos plan to recuperate any unavoidable circumstance in forthcoming
economic arena. Bangladesh with no exception is also capitulated under a
significant threat of economic disparity navigating a colossal crisis during and
after this epidemic. This paper attempts to reveal what those possible impacts
are causing this economic crisis for Bangladesh and how government along
with all other stakeholders will respond to sustain socio-economic
developments achieved during the recent fiscal years in spite of being
submerged by the depressing mode of major economic indicators such as
inverse trade growth, vigorous revenue deficit, mounting non-performing loan,
falling private sector investment, volatility of market interest rate, capital
market unrest and imminent horrid of global economic recession.
Introduction
With the outbreak of novel coronavirus-2 (nCoV-2) declared a pandemic and an
international public health emergency by the World Health Organization
(WHO), the entire world is working to address it. It is a rapidly evolving and
emerging situation. In <5 months after the first emergence of the virus in
December 2019, nearly two million people in 185 countries around the globe
have been identified as confirmed cases of coronavirus disease 2019 (COVID-
19) (1). Researchers across the world are working hard to understand better the
biology of nCoV-2 and the epidemiology of the novel coronavirus disease-19
(COVID-19). The estimated basic reproductive number of the virus is
significantly higher than many other infectious diseases, and this can potentially
result in the capacity of health facilities becoming overwhelmed, even in the
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countries that have the most developed healthcare systems (2). An estimated
20% of cases lead to clinically serious and complex conditions. With some
sporadic cases of serious illness in younger individuals, adults >60 years of age
and with co-morbid conditions make up the most vulnerable group. Being in the
corona war, policymakers worldwide are engaged in damage-control of the
economic losses at the moment and preparing for confronting the upcoming
economic crisis. In addition, there are evidences and indications that financial
and banking industries around the globe might have to face remarkable
instability in the forthcoming months. There are as yet no vaccines or antiviral
drugs approved for the disease, and hence, non-therapeutic interventions to
control the spread of the virus are the most effective measures to control the
disease (3). Worldwide, billions of people are staying at home to minimize the
transmission of the virus. Many countries are adopting preventive measures,
e.g., remote office activities, international travel bans, mandatory lockdowns,
and social distancing. Bangladesh, a lower-middle-income country and one of
the world's most densely populated areas, is struggling to combat the spread of
the disease. In this write-up, we briefly articulate the current scenario of
COVID-19 in Bangladesh and provide some recommendations on how the
country can combat this pandemic.
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Rational
COVID-19 – otherwise known as Coronavirus disease – has been dominating
the headlines recently. While it is spreading quickly across parts of Asia and
beyond, there are simple precautions you can make to reduce the risk of
infection and transmission. Like other respiratory illnesses, it can cause mild
symptoms including a runny nose, sore throat, cough, and fever. It can be more
severe for some persons and can lead to pneumonia or breathing difficulties and
organ failure. More rarely, the disease can be fatal. Older people, and people
with pre-existing medical conditions appear to be more vulnerable to becoming
severely ill with the virus.
Some are best ways to avoid this pandemic to do things rightly. The priority for
all South Asian governments is to contain the virus spread and protect their
people, especially the poorest who face considerably worse health and
economic.
The World Bank, UNICEF, Who everyone is spreading how to avoid it like-
What are proper ways to wash hands.
Why should people use medical mask
Are they at risk or not etc.
They are making people awareness So that people can be safe. If this pandemic
spread it can harm every country's economy as it already did. Now, it is high
time for the government as well as business enterprises to assess the situation
and chalk out a long-term plan to control damage. It is noteworthy to say that,
we should not start blame-game now and ask for assistances from the
government only due to the limitations and scarcity of resources of different
agencies of government. But the prime role of the government should be clear
any unwanted obstacles and create opportunities among the economy by the
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way of sound and clear directives like monetary & fiscal policies as well as tax
structure to face the catastrophic situation.
Objectives
To delineate the transmission dynamics of COVID-19 and evaluate the
transmission risk at different exposure window periods before and after
symptom onset. At this stage (May 2020) of the U.S. COVID-19 pandemic,
rapid contact tracing and notification of those exposed to infected persons is
critically important to stopping further spread of the disease. Several digital
tools have now been developed—some by established information technology
(IT) companies, others by small, entrepreneurial organizations—to support
various parts of the contact tracing process. Unfortunately, to date there has
been no national-level opportunity for local and state health officials to
collaboratively assess these tools, and consider whether and how they might
best support contact tracing.
To provide a platform for this critically-needed deliberation, PHII is now
convening and managing a forum to help inform and coordinate the use and
further development of digital tools in support of contact tracing. Given the
urgency of the need for guidance, this project will be carried out in a short, four-
week period. To develop and provide guidance to state and local public health
officials to assist their understanding of the marketplace of digital tools in
support of contact tracing, and to provide guidance to industry partners (i.e.,
technology companies) to ensure technology meets the functional and privacy
needs and standards required by state and local public health officials for
contact tracing. This uses data from WHO's COVID-19 Dashboard on cases
reported by countries, territories and areas to WHO. Text for listings has been
taken from the Timeline of WHO’s response to COVID-19. Caution must be
taken when interpreting all data presented, and differences between information
products published by WHO – such as the WHO COVID-19 Situation Reports –
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national public health authorities, and other sources using different inclusion
criteria and different data cut-off times are to be expected. While steps are taken
to ensure accuracy and reliability, all data are subject to continuous verification
and change. All counts are subject to variations in case detection, definitions,
laboratory testing, and reporting strategies between countries, states and
territories. Data last updated 23 July 2020.
Relevant literature
New Approaches to Economic Challenges (NAEC) Abstract Policymakers often
have a linear view of the world, where pulling the right levers will get the
economy and society back on track after shocks and crises. This paper argues
that such an approach ignores how systems interact and how their systemic
properties shape this interaction, leading to an over-emphasis on a limited set of
characteristics, notably efficiency. The emphasis on efficiency in the operation,
management and outcomes of various economic and social systems was not a
conscious collective choice, but rather the response of the whole system to the
incentives that individual components face. This has brought much of the world
to rely upon complex, nested, and interconnected systems to deliver goods and
services around the globe. While this approach has many benefits, the Covid-19
crisis shows how it has also reduced the resilience of key systems to shocks, and
allowed failures to cascade from one system to others. A systems approach
based on resilience is proposed to prepare socioeconomic systems for future
shocks.
“Everything we do before a pandemic will seem alarmist, everything we do
after a pandemic will seem inadequate.” US Health and Human Services
Secretary Michael Leavitt in 2007 Recent decades have emphasised efficiency
in the operation, management and outcomes of various economic and social
systems. This was not a conscious collective choice, but the response of the
whole system to the incentives that individual components face. As a result,
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much of the world now relies on complex, nested, interconnected systems to
deliver goods and services. While this has provided considerable opportunities,
it has also made the systems we rely on in our daily lives (e.g., international
supply chains) vulnerable to sudden and unexpected disruption (Juttner and
Maklan, 2011; OECD and FAO, 2019). In complex systems, tensions exist
between efficiency and resilience, the ability to anticipate, absorb, recover, and
adapt to unexpected threats. Resilience is a focus of specific parts of some
systems, for instance military and health systems, but some systemic risks are
the consequence of attempts to maximise efficiency in subsystems leading to
suboptimal efficiency at higher levels.
The Covid-19 outbreak is the first global pandemic to be caused by a
coronavirus, leading to a crisis with considerable losses in terms of health but
also to much of the global economy, with high social costs. The pandemic has
reminded us bluntly of the fragility of some of our most basic human-made
systems. Shortages of masks, tests, ventilators and other essential items have
left frontline workers and the general population dangerously exposed to the
disease itself. At a wider level, we have witnessed the cascading collapse of
entire production, financial, and transportation systems, due to a vicious
combination of supply and demand shocks.
Economy of Bangladesh
Bangladesh’s economic freedom score is 56.4, making its economy the 122nd
freest in the 2020 Index. Its overall score has increased by 0.8 point, led by a
higher score for property rights. Bangladesh is ranked 29th among 42 countries
in the Asia–Pacific region, and its overall score is well below the regional and
world averages. Bangladesh has made steady albeit incremental progress toward
greater economic freedom during the past five years. Although its economy has
remained stuck in the mostly unfree category, its GDP growth during the same
period has been robust. A welcoming attitude toward foreign investment and
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restraint on the growth of government may partially explain the discrepancy.
For Bangladesh finally to break into the ranks of the moderately free, the
government would have to make a sustained, multiyear effort to improve the
three rule-of-law indicators and permit the entry into the country of more
international banks and the best practices they would bring with them.
Impact of Covid-19 on the economy in Bangladesh
The Covid-19 pandemic has thus far spread to 208 countries and regions of the
world, significantly affecting the global economy. Since the virus has been
growing exponentially, even the developed countries have been unable to
contain its spread. As a result, people are dying in the affected areas at an
alarming rate. We cant even think how deadly the highly contagious disease
will turn if it spreads from a moderate to a strong category in India or
Bangladesh.
Bangladesh is the most densely populated country in the world, however, to our
concern, the healthcare facilities in the country are too limited to serve its 160
million-plus population.
If we look at the sector-wise resource distribution of operating and development
budget for the fiscal year 2019-20, we would see the health sector has received
merely 4.9% of the total allocation. Meanwhile, the education and technology
sector has received 15.2% allocation which is more than 3 times higher than the
health sector allocation. Due to poor investment in healthcare infrastructure
nationwide and scarcity of medical equipment i.e. testing kits, and doctors to
combat Covid-19, the government is passing a very hard time. The government
should act promptly to allocate further resources to healthcare infrastructure
development to tackle this pandemic. Till now, there is no vaccination for this
virus. Thus isolation and lockdown are the only means to stop the spread of this
deadly virus.
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Bangladesh outlook
The unprecedented Covid-19 pandemic has caused disruptions to global trade,
business, and education. Bangladesh is equally affected by this contagion. The
economic consequences of the Covid-19 outbreak are tough to handle as the
entire of the global supply chain has been interrupted due to worldwide
transportation shutdown. Till now, the Bangladesh readymade garments (RMG)
industry has received work order cancellations of nearly $3 billion. Around 2
million workers in the industries will be affected by this. Around 4 million
people are directly engaged with the RMG sector e.g. backward linkage
industries, accessories and packaging factories and transportation sector. The
import and export-oriented companies are also at risk. The foreign remittance
will come down and thus it will hit the foreign reserves of the country.
Bangladesh will fall into a really difficult situation if the country remains locked
down for a longer period. Here, a huge number of people live from hand to
mouth. Consistent high growth has been unable to create sufficient jobs in the
economy. Due to inequality of income and asset distribution, the advantages of
higher GDP growth is not evident in society.
Recently, garment workers coming back to Dhaka amid the government-
imposed shutdown and the risk of getting infected only revealed that due to
disparity in wealth distribution these people are unable to stay at homes without
work for their survival, thus, they are concerned much more about their job
rather than Covid-19.
Impact on Foreign Remittance
The economic importance of the more than 10 million migrants from
Bangladesh who sent close to $18 billion in 2019 cannot be overstated.
International remittances normally represent around 7% of Bangladesh’s GDP.
But the COVID-19 pandemic is having an acute effect on Bangladeshi migrants
abroad, who are largely concentrated in countries with strict lockdown
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measures. Considering the large volume of Bangladeshi migrants in the Middle
East, secondary economic impacts through depressed demand and falling oil
prices will also likely add strain to the flow of remittances.
World Bank have projected that total remittances by migrant workers from
Bangladesh will fall to $14 billion for 2020 – around a 25% decrease from the
previous year. Figures released by Bangladesh Bank show that year-on-year
remittances for the month fell by 25%, indicating that the World Bank’s
projection is, unfortunately, likely to hold true. The drop in these payments,
which have traditionally averaged between $300 and $600 a month, will
represent a significant loss to millions of household incomes in Bangladesh.
Impact on Banking Sector
banking sector of Bangladesh is seriously affected by the affects of Corona
Virus. Banking sector is the wheel of an economy. The health of the banking
sector depends not only on policy of the bank itself but also the growth of all
other sectors of the country. Again when the health of the banking sector
deteriorates then growth of all other sector also affected. So, Banking is closely
interrelated with rest of the wings of the economy. Due to the pandemic of
Covid-19 and lockdown of the country, the different risks of the Banking sector
are being surged which very alarming for the economy.
The major Risk the Bank will face is Credit Risk. The Non-performing Loan
(NPL) of the Bank may rise in a new level due to this pandemic. Already most
of the businesses have suspended their business operation due to lockdown.
Export oriented industries are losing their confirmed orders as the foreign
counter part's businesses also stopped. In this situation, the credit worthiness of
the existing borrower will be deteriorated which block the possibility of
repayment of loan. In March, Bangladesh Bank has already issued a circular not
to change the classification status of the borrower up to june-2020 as country is
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affected by corona virus. This is truly a good decision indeed. But, result of it,
most of the borrower has already stopped regular repayment as they are really
badly affected by Corona. Bangladesh government has declared different
stimulus for survival of different industries, SMEs of the country which is total
Tk 50,000 crore and entire fund will be arranged from the Banking sector of the
country. If any borrower who has already loan liability, avail further loan under
these stimulus package then the borrower has to repay both the existing loan as
well as new loan under stimulus which will be quite hard for most of the
borrower in an adverse business environment. So, debt burden of the borrower
will increase. As already the Non-performing loan (NPL) of the banking sector
is a concern, if the borrower further fails to repay the fresh loan then the
situation will be worse. To avoid the situation Bank will try to choose only the
good rated clients whose track record and financial capacity are already good
but this mentality will not serve the purpose of stimulus package as the entire
real affected businessman may not get the opportunity.
Another risk which may increase is Liquidity Risk. The Banking sector of our
country has been suffering from crisis of liquidity in last one and half year.
ADR/ IDR (Advance deposit ratio/ Investment deposit ratio) of most of the
Bank were in high over the prescribed rate of central Bank. Bangladesh Bank
had given time limit for the Banks to bring down the ADR within the prescribed
limits but most of them failed to comply. Still some Banks could not bring
down the ADR under the prescribe rate. Due to the effect of COVID-19 and
result of economic downturn the fund flow will be reduced. Bank is going to
face further liquidity crisis. On the other hand, as the government declared
stimulus will be arranged from Banks' own fund so Bank need additional fund
to implement this. To cover up the financial crisis, depositors will withdraw the
deposits which is very expected in such economic stagnant situation. Moreover,
increase of NPL also negatively affects the fund inflow of the Bank.
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Impact on Foreign Trade
BD'S EXPORTS DURING COVID-19 Although Bangladesh's overall export
earnings reduced by 5.8 percent in the first half (Jul-Dec) of FY2020 and 6.2
percent in first three quarters (Jul-Mar) of FY20, these negative changes were
actually caused by downfall in global demand in 2019 due to growth slowdown
in industrialised countries. The effect of Covid-19 crisis on the country's exports
has been becoming visible from the month of April 2020 with a 13.0 percent
decline in July-April period of FY20. In response to the evolving situation,
containment measures have been relaxed from the month of May for RMG
manufacturers and the government has been negotiating with the buyers and
governments of the destination countries for restoring the orders. If garments
factories remain operational in the remaining two months of the current fiscal
year, it can be expected that these reductions in exports earnings will remain
within manageable limits. Despite these progresses, the export prospects of the
next fiscal year remain highly uncertain for several reasons.. Thirdly, the
retailers are likely to sell their existing stock of products before placing new
orders as they have piled up unsold stock during the lockdown periods. These
factors together can reduce the demand for imports in destination countries,
thereby further lowering Bangladesh's export demand.
Impact on Agriculture
Agriculture is a major sector for our economy, and is crucial to reduce our food
insecurity. Now, agriculture doesn’t only mean by rice, vegetables, or fruits -- it
also includes fisheries, poultry, livestock etc. Because the world has never
experienced a thing like Covid-19 before, the situation is likely to direly afflict
the agriculture sector as well. The agriculture sector is going through a major
crisis now, without a doubt. A disruption of the entire supply chain and a
reduction of the mobility of labour due to social distancing and decreased
transportation are just a few of the problems. This is the time to harvest crops in
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the field, and a crisis of available labour is reduced by introducing
mechanization in agriculture. Mechanization is not a new concept, but the
question is, why has adequate preparation not been taken already? We also need
to think about the agricultural labour community, about their next or future
employment, as they lose their jobs due to both this pandemic and
mechanization.
Impact on Industrialization
The readymade garment (RMG) industry, which has been pivotal in the
economic growth of Bangladesh, is facing an uncertain future following
the COVID-19 pandemic. The industry, which is the world’s second
largest exporter of readymade garment, is now staring at a loss of nearly
$6 billion following the cancellation or suspension of orders by its buyers.
Bangladesh’s RMG sector started facing obstacles much earlier than the
world. The initial challenges were related to sourcing of the raw material
following the suspension of economic activities in China as the virus
spread in that country. The industry relies heavily on China for its raw
materials. This is also a significant portion of Bangladesh’s billions dollar
imports from China. The diversification of supply chain and the opening of
the economic activities in China now has resolved the raw materials issue.
However, then came the cancellation of orders, which is now threatening
the survival of the sector.
Findings
These study findings about Covid-19 might assist in formulating the strategic
decision focusing on SME's revival and regrowth after the pandemic become
stable. Study findings also utterly established the fact i.e. government should
invest considerable effects for mobilization and efficient reallocation of
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resources through collaboration of both Banks and nonbanks financial
instructions. Else, unemployment, decline growth speed, and social insecurity
might appear and prevail in the long run.
Conclusion
COVID-19, a new and sometimes deadly respiratory illness that is believed to
have originated in a live animal market in China, has spread rapidly throughout
that country and the world. Bangladesh economy is at risk due to lockdown for
Covid-19. The new coronavirus was first detected in Wuhan, China in
December 2019. Tens of thousands of people were infected in China, with the
virus spreading easily from person-to-person in many parts of that country. The
novel coronavirus infections were at first associated with travel from Wuhan,
but the virus has now established itself in 177 countries and territories around
the world in a rapidly expanding pandemic. Health officials in the United States
and around the world are working to contain the spread of the virus through
public health measures such as social distancing, contact tracing, testing,
quarantines and travel restrictions. Scientists are working to find medications to
treat the disease and to develop a vaccine. The World Health Organization
declared the novel coronavirus outbreak “a public health emergency of
international concern” on January 30. On March 11, 2020 after sustained spread
of the disease outside of China, the World Health Organization declared the
COVID-19 epidemic a pandemic. Public health measures like ones
implemented in China and now around the world, will hopefully blunt the
spread of the virus while treatments and a vaccine are developed to stop it.
Recommendations
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The impact of the pandemic will hit hard low-income people, especially
informal workers in the hospitality, retail trade, and transport sectors who have
limited or no access to healthcare or social safety nets. The report notes that the
COVID-19 shock will likely reinforce inequality in South Asia. As played out
across the region, the sudden and large-scale loss of low paid work has driven a
mass exodus of migrant workers from cities to rural areas, spiking fear that
many of them will fall back into poverty. While there are no signs yet of
widespread food shortages, the report warns that a protracted COVID-19 crisis
may threaten food security, especially for the most vulnerable. In the short term,
the report recommends preparing weak healthcare systems for greater COVID-
19 impacts, as well as providing safety nets and securing access to food,
medical supplies, and necessities for the most vulnerable. To minimize short-
term economic pain, the report calls for establishing temporary work programs
for unemployed migrant workers, enacting debt relief measures for businesses
and individuals, and easing inter-regional customs clearance to speed up import
and export of essential goods. Once lockdown restrictions are loosened, South
Asian governments should adopt expansionary fiscal policies combined with
monetary stimulus to keep credit flowing in their economies. Since many South
Asian countries have limited fiscal space, these policies should target people
worst hit by the freeze on economic activity. The report urges governments to
adopt temporary spending measures and coordinate with international financial
partners to avoid unsustainable long-term debt levels and fiscal deficits.
Reference
1. www.ssrn.com
2. m.economictimes.com
3. www.undp.org
4. openwho.org
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5. www.heritage.org
6. tbsnews.net
7. www.atrainceu.com
