ADB on Bangladesh: High outbreak of Covid-19 may hurt economy
The country's economy will suffer a lot if there is a significant coronavirus outbreak, the Asian Development Bank said yesterday.
The warning came on the 9th day of the nationwide shutdown aimed at slowing down the spread of the highly contagious disease. However, the shutdown suspends many economic activities and puts thousands of jobs at risk.
The Manila-based multilateral lender early last month said the Covid-19 pandemic could wipe out $3.02 billion off Bangladesh's $300 billion-plus economy in the worst-case scenario of a significant outbreak.
In such a scenario, 894,930 jobs will be lost, according to last month's ADB analysis.
ADB yesterday said its preliminary estimates indicate that about 0.2 percent to 0.4 percent of Bangladesh's GDP may be lost due to spillover effects of the global Covid-19 pandemic.
"If a significant outbreak occurs in Bangladesh, the impact could be more significant. The outlook will be updated as more information becomes available," said ADB Country Director in Bangladesh Manmohan Parkash in a statement.
With the spread increasing gradually, Bangladesh economy has started taking a hit. Exporters are saying that international orders are being cancelled while importers say that their businesses have declined.
In March, remittance inflows were $1.28 billion, a 12 percent drop from the same period last year, according to Bangladesh Bank data.
ADB said Bangladesh economy continued to perform well despite the global economic slowdown. "However, there exists a downward risk due to the COVID-19 global pandemic."
Parkash appreciated the government's recent interventions and said, "Addressing cash management challenges and broader resiliency issues due to Covid-19 related shutdowns and economic knock-ons could help minimise impact on Bangladesh economy."
Bangladesh economy showed strong performance with growing domestic demand, supported by substantial increase in workers' remittances during the first 8 months of the current fiscal year.
"However, the COVID-19 pandemic could hamper such trend due to disruptions in export demands, suppressed consumption, and curbed remittances."
In its Asian Development Outlook (ADO) 2020, which does not reflect the impact of the COVID-19, the ADB said Bangladesh economy might remain strong in the 2019-20 fiscal.
The gross domestic output of the country would grow by 7.8 percent in the current fiscal year, ending on June 30, it forecasts.
These growth forecasts rest on several assumptions of continued political calm, maintained consumer and investment confidence, depressed exports and imports and recovery in the next fiscal,expansionary central bank monetary policy, and favorable weather, said the ADO.
Low revenue collection continues to be a key challenge for the economy it adds.
"The low revenue to GDP ratio in Bangladesh diminishes the country's capacity to sustain high economic growth and reduce poverty. Revenues thus need to be raised significantly through comprehensive tax reforms, by expanding the tax base and making resource mobilization more efficient to support much-needed public expenditure on infrastructure, health and social development."
In a facebook post, Towfiqul Islam Khan, senior research fellow of Centre for Policy Dialogue, said the ADB report did not consider the impact of coronavirus on Bangladesh economy, but it considered the impact of the pandemic on the economies of all the other countries in Asia.
"So in my view, Bangladesh's growth forecast is not comparable to most of the countries," he wrote.
"We should not focus on GDP at this moment. Our full attention should be on saving and protecting lives and livelihood of the marginalised people. We should also plan for an economic recovery to be implemented after winning this ongoing war against the pandemic. GDP growth can wait."