Impact of Coronavirus
Economy will take more time to turn around: Experts
Some sectors show positive signs
Published : Tuesday, 14 July, 2020 at 12:00 AM Count : 1993
Some most important sectors of the country have started turning around recovering from the adverse impact of the ongoing coronavirus outbreak but there is meager chances of regaining the economy immediately.
Rather, the country's senior economists said the economy could slightly be recovered immediately. It may take a long time to regain the economy to its previous stage even after post-coronavirus normalcy across the world.
According to the economists, the remittance inflow, small business, central bank reserves and export growth have started turning around. If the progress continues, they think the country might be saved from economic recession.
But, it may take lots of times for the economy to recover as thousands of people have lost their employment due to suspension of factory-industries operations and closure of shops.
As income of private companies and entities has declined drastically during the pandemic due to various reasons, millions of people had to lose their jobs and go back to villages.
In this situation, it's really too hard to start economic activities like earlier. As a result, economic mobilization can be delayed and the economy may return to its previous stage taking some more time.
While talking to this correspondent over phone, Professor Mostafizur Rahman, former executive director of Center for Policy Dialogue (CPD), said reserves, remittances and domestic markets and demand in the economy are showing positive signs.
These are needed to be used to deal with the impending recession. In order to implement the package announced by the government quickly, the banks will have to increase the disbursement of loans, he said.
"We have to take initiative to increase people's income. Then the internal economy can be activated. But first of all it is necessary to reduce health risks. The economy cannot be revived without reducing health risks," he added.
He said foreign labour exports have stopped. Many are coming back. This will reduce remittances. The reserves are more positive. However, even if imports increase, the reserve pressure will increase.
There is going to be a global economic downturn. This will have an impact on Bangladesh.
He said the global recession, remittances and export earnings will decline in future. These issues need to be considered.
"We have to keep the economy afloat by taking forward the internal positive aspects, he added.
Sources said Bangladesh's foreign exchange reserve crossed the USD $35 billion mark for the first time in its history, following lower import payment obligations and steady growth of inward remittance.
"Our forex reserve has crossed the $35 billion mark following lower import payment pressure on the economy and upward trend of inward remittance in recent days," a senior official of the Bangladesh Bank (BB) explained.
Export Promotion Bureau (EPB) sources said in June 2020 export earnings stood at $2.71 billion showing a 2.50 percent decline compared to the corresponding month of the previous fiscal year.
Apparel export is coming back to the right track as June figures showed and it is good news for all, said Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh.
"We need to see if this trend sustains. If this continues in the next few months, we will be able to be out of the woods," he said.
Remittance inflow hit a new record of $18.20 billion in the just concluding fiscal year, although coronavirus pandemic battered most of the global economies.
The inbound remittance surged by 10.87 percent to $18.20 billion in the last fiscal year, as a 35 percent growth registered last month.
The inflow of remittance reached a new height of $1.83 billion in June. Previously, the highest amount of remittance amounting to $1.74 billion was in May last year, according to the data of the Bangladesh Bank (BB).
Sources said the Asian Development Bank (ADB), said Bangladesh's economic recovery from the coronavirus-induced downturn would be V-shaped.
ADB said the country would grow at 7.5 percent during the current fiscal year that began on July 1 helped by strong manufacturing.
The World Bank projected that the economy would grow at just 1 percent in the fiscal 2020-21 and the International Monetary Fund projected 5.7 percent growth.
Saiful Islam, President of the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), an organization in the leather sector, full utilization of production capacity does not seem possible.
Economist Sayed Abdul Hamid said if coronavirus can be brought under control in the next two to three months, it is possible to bring the country's economy back to normal within a year or two months.
However, the governments of some countries, including the United States, have already announced large-scale incentive packages to offset economic losses.
In line with the world, the government has also announced a large amount (one lakh crore) incentive package, he added.