Economic pangs of the pandemic

We had predicted at the very outset of the pandemic that one of the long lasting inevitable negative impacts of Covid-19 would be on the economy of the country, and that countries across the board, irrespective of their economic status, would have to cope with the economic downturn long after the health hazards of the pandemic were mitigated. We are not done with the pandemic yet and many parts of the world are faced with not only a second wave but also different strains of the virus. However, the initial manifestations of the socio-economic impacts are already far too easy to see.

According to a nationwide survey carried out by South Asian Network on Economic Modeling (SANEM) between November and December last year to find the impacts of the pandemic on socio-economic conditions, 42 percent of 5,577 households covered in the survey were found below the poverty line. Interestingly, SANEM had interviewed the same group of households in 2018 and had found 21.6 percent of them to be below the poverty line. This percentage doubled last year—all due to the pandemic. The consequences have been worse for rural areas than urban areas. Another long-term impact in this regard is the rise of the extreme poor to 28.5 percent last year from 9.4 percent in 2018, nationally. Sadly, those who were marginally over the poverty line have gone below it in the last one year.

While these adverse economic impacts are not unique to Bangladesh, perhaps the pinch has been felt harder here. Therefore, the authorities need to address the situation that is germane to Bangladesh, stemming from the pandemic, such as the emergence of this "new poor".

The poverty level has increased—this is a reality. Numbers are not as important as how we respond to the phenomenon. The government has to address all the three sectors that have been hard hit: the decline in domestic economic activity and impact on the informal economy, the impact on RMG exports and the decline in foreign remittance. We believe that the government should chalk out immediate, short and long term plans to overcome the crisis. The most important thing is to generate economic activity and employment opportunities by increasing investment, implementing special programmes to provide cash and food assistance to the poor in the worst affected areas, and providing loans to encourage small business.