Is Our Economy on the Way to Revive? Naeemul Abrar
A few months back people throughout the world moved freely from one place to another, travelling to their desired places without restrictions, joining economic activities, living peacefully, doing their jobs without any fear and panic. All of a sudden, an invisible enemy named Covid-19 came and it brought a dramatic change in the life of people all over the world. Bangladesh is one of the worst sufferers of it.
The first COVID patient was found in Bangladesh on 8th March and Bangladesh noticed the first death on the 18th March. With the passage of time, this virus continued to spread all over the country. On 26th March, the government declared ‘Stay at Home ‘and virtually shut its entire economy to flatten the curve on corona virus.
This nationwide ‘Stay at Home’ order resulted in simultaneous supply and demand shocks as production, consumption, trade and investment all came to a standstill. People weren’t allowed to come out for any purpose except kitchen market, grocery, medicine and emergency cases. But people weren’t prepared to face such an unexpected lockdown which resulted in great hardship for them. With the declaration of this ‘Stay at Home’ order, the entire economy came to a standstill. As mills, factories and production houses were shut down and workers could not join them, the entrepreneurs failed to pay the workers their wages. This caused stopping of circulation of money which was the most terrible issue.
Due to this stagnation, circulation of money was stopped. As a result, most of the people lost their purchasing power more or less. In fact, domestic production of the country came to a standstill. At the same time, domestic consumption which accounts for 75% of the economy noticed a cliff-like drop. And this drop severely affected retail, accommodation, restaurants and transportation sectors of the economy. Hotels and restaurants were asked to keep-off for maintaining social distancing and health issues. As a result, more than 5 million people, directly or indirectly related to this sector, were affected severely.
Public transport was also hit hard by COVID-19. Since the onset of the pandemic, cities across the world had to enforce massive restrictions on public transport in order to limit transmission of the virus. These restrictions resulted in terrible livelihood losing for the drivers and helpers of these transports. Most of these people live from hand to mouth. And in this pandemic time, without any saving, they had to lead a miserable life.
Many informal workers, which accounts for 85% of the workforce, lost their livelihood instantly. There are some traditional growth drivers of economy of Bangladesh.
RMG is one of them. Since Europe is one of the epicentres of this deadly virus, a country like Bangladesh, which economically depends on exports has experienced a sharp decline in export earnings. According to data, the country’s single month merchandise shipment showed 82.85 percent negative growth in April this year with only $520.01 million, the lowest in the fiscal year 2019-20.
The total export earnings have come down by 16.93 percent. The RMG sector holds the lion’s share of all exports in Bangladesh. It accounts for about 83 percent of the country’s export worth $27.95 billion in the FY2019-20. The slump in the most prominent sector of the country with the outbreak of the pandemic raises concern on meeting the export target of $45.5 billion in FY2019-20.
The RMG sector registered a negative growth of 14.08 percent during July-April of FY2019-20 in comparison with the same period of the previous fiscal. Bangladesh, the contribution of the remittance sector is significant particularly for stimulating poverty alleviation, improving the standard of living and creating productive assets (Islam, 2011; Bangladesh Bank, 2019). The country is the third-largest recipient of remittances within the South Asian region (Bangladesh Bank, 2019). According to the Bureau of Manpower, Employment and Training (BMET), Bangladesh has received a total of $213,178 million as remittances from 1976 to February 2020. Within these years, 13,028,410 expatriates have migrated abroad for employment, although many have returned back.
It is no longer unknown that the outbreak of Covid-19 is posing an unprecedented threat to the global economy, the Asian Development Bank observed. As a result, the world is witnessing one of the worst global financial crises in human history. The Covid-19 pandemic caused the suspension of many construction projects in many Middle-Eastern countries, including the Kingdom of Saudi Arabia (KSA), which is a prime source of remittances for Bangladesh. As a result, a huge number of expatriates are had to lose their jobs and livelihood. The authorities of KSA had decided to cut wages by about 25 percent to 50 percent due to the global lockdown because of the stagnation of major economic activities and also a fall in oil prices. To battle such an economic downturn, the Gulf countries laid -off their workers, which will exacerbated the situation by leading to bulk unemployment, The New York Times reported. For these issues, a huge number of expatriates had to lead a miserable life and some of them were compelled to return back.
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 had to go through a major crisis, 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. A market management crisis of goods and services was noticed during the lockdown days. Besides, underdeveloped medical system caused great troubles for people who got infected by the virus.
But a sigh of relief is made when we notice that the economy is recovering quite quickly. At this case, the game changing decision was the reopening of the RMG sector. Though this decision was severely criticized by most of the people, we noticed a positive impact of this decision within a few days. With this reopening, workers started to join their workplaces. At the same time, the entrepreneurs received a good amount of debt from the government to pay the wage of the workers. Meanwhile cancelled orders started to be recovered and thus the money continued to circulate all over the economy. Disruption in the circulation of money was a short-term crisis and this crisis was solved at a great extent with the reopening of the mills, factories and production houses.
Considering the reopening of RMG sector as icon, other industries, shopping malls, mills, factories started to reopen. People got engaged in their own activities. The money started to circulate to the entire economy. As a result, people’s purchasing power and consumption increased dramatically. Internal production got boost up within a few weeks after the lockdown.
Consequently, the disruption in the supply chain got vanished. Hotels-restaurants were reopened at the same time imposing some conditions. The restrictions, imposed on the movement of vehicles, were removed step-by-step. But at the same time, the government encouraged and compelled the people to maintain health issues. With the passage time, the government continued to strengthen it’s medical institutions. The most dramatic change was seen at the RMG sector as it recovered very fast. In this recovery procedure, mass media played a vital role.
Though our economy is recovering quite quickly, there are still some problems. Unemployment and returning back of expatriates are the major two problems. Unemployment is a prolonged problem and huge amount of investment is needed in order to solve this problem. A huge number of people have migrated from city to village and their standard of living has been diminished. In order to upgrade their standard of living, the government should come forward with a huge amount of investment. As none other is going to invest for these people, the government must come forward to promote their condition. Otherwise, very soon they will go under the poverty line.
The other major problem is returning back of the expatriates. These people are mainly returning back due to financial crisis. But we have to keep in mind that this pandemic won’t last forever. And the noteworthy thing is that the economy and social -system of Middle -Eastern countries are totally dependent on the expatriate workers. The people of those countries can’t go a single day without these expatriates. So it is better for the expatriates as well as for the country that they must retain their position in those countries. Because, after this pandemic, the infrastructural development activities will boost in Middle Eastern countries due to this long-term stagnation.
Therefore, in order to utilise those opportunities, our expatriates must retain their positions. In this case, our diplomats can play a vital role. They can support our financially and in other ways. Our workers should get engaged in agricultural work in those countries as they have a good hand in it. In this regard, the government must play significant role.
The writer is undergraduate student of Economics, University of Dhaka