As governments across the world enforce lockdowns to contain the spread of Covid-19, global markets are expected to be at their worst since the 2008 financial crisis. The question which perturbs many developing nations, then, is what will be the impact on their nascent, growing economy? A similar note and concern is shared by the burgeoning economy of Bangladesh.
In the week ending 11 April, coronavirus positive cases in Bangladesh grew 1155 per cent, the highest in Asia. Despite the extension of the ongoing shutdown by the government, infections saw a steep rise in the country.
Although to help cushion the economic blow from the COVID-19 pandemic, Bangladesh Prime Minister Sheikh Hasina announced $8 billion stimulus package, also mentioning in her speech that the virus escalation could cut the country’s economic growth.
However, the potential negative impact on the economy would depend on the duration of the crisis. COVID-19 has exposed the vulnerability of cross-country supply chain, especially of the RMG sector, as its key global trading chains have been disrupted due to disastrous healthcare performances in the US and Europe. This is not surprising because a slowdown in the US and EU economies have had ripple effects in the country’s economy — as they are major markets for Bangladesh’s most vital tradable good.
With such a situation in place and crisis of a completely different magnitude, one will require a response of unprecedented scale. The South Asian nation requires unequivocal support from both the leaders in the public and private sector to prepare against immediate threats to health systems and long-term effects on the country’s economy.
Where on one hand, Prime Minister Sheikh Hasina led Awami League government has taken some bold measures, such as the allocation of $2.5 billion for bridge financing to protect the livelihood of people employed in small and medium-sized industries, on the other, private companies like Beximco Group, which is co-owned by Salman F Rahman, one of the most successful businessmen in Bangladesh, has been quite proactive and socially responsible in providing adequate equipment support to the healthcare professionals and manufacturing drugs to fight the pandemic.
Furthermore, the country’s business leaders recently also underscored the need for forming a task force to implement different measures the government had taken to overcome the losses caused by COVID-19 outbreak. Through digital meeting which was chaired by Salman F Rahman, who is also the Private and Industry and Investment Adviser to Prime Minister Sheikh Hasina, business leaders agreed to offer their full cooperation and support to the government.
What more could be done
Even though the government has taken preemptive measures to protect the interests of people, there still could be a significant impact on the livelihood of the workers in the informal sector. For instance, the government could consider an unconditional cash transfer program, which can be complemented by country’s highly sophisticated mobile financial services network.
The fight against novel coronavirus can’t be fought alone by the government and needs unequivocal support from the private sector as well. A collaboration could increase the health security and enhance the country’s economic resilience.
