"Corona-virus can't tame Bangladesh's growth momentum", declared a report issued by the Ministry of Finance of the country. Strong domestic demand fuelled by growth in the flow of remittance and increased public expenditure will counter any possible external shocks, according to the report, which was sent to the Prime Minister's Office. In other words, the Prime Minister will receive a very rosy picture for the rest of the year, so far as the domestic economy is concerned.
However, it appears that this report is premature and out of sync with the cautious forecasts emanating from think tanks in Bangladesh and abroad. It is true, as a news report in The Daily Star on February 28 cautions, "The magnitude of the impact on Bangladesh's international as well as overall commerce cannot be ascertained yet," but we already see signs that the months of March and April could yield some sobering statistics. There has been a visible slowdown in the rest of the world and our expats are conserving their resources in anticipation of harder times ahead. Have we seen the worst of the damages of the coronavirus pandemic yet? Not by any stretch of imagination!
The last three months have been indeed very traumatic for the world economy, particularly for the economies of Southeast Asia. China, the largest trading partner of Bangladesh and the primary source of our raw materials, has been under lockdown. While some sectors of Bangladesh will be more affected than others, there is no denying the fact that the economy and its citizens will feel the effects of the fallout from this global crisis. There are many scenarios, from marginal to major, depending on how severely we get hit, but we must always hope for the best and prepare for the worst, and take precautionary measures to avert any disaster.
There are also many vulnerable populations living within the perimeters of the capital, Dhaka. Let us take the case of slum dwellers. They are much more susceptible to contracting COVID-19 because of the cramped quarters, the sharing of utensils, and lack of proper sanitation facilities. There are millions of garment workers who live in group quarters or rooming houses where three or four people might be sharing a room or even a bed.
Poor people have underlying medical conditions and lack reliable healthcare, meaning that once infected, they are far more likely to get very sick or die. One study found that 30 percent of the population in basti areas have chronic diseases. The wealthy and the middle-class, on the other hand, have more resources, or a "deep pocket", to cushion any health, financial, and social ramifications of the illnesses or business turndown in Bangladesh.
Rich nations, international institutions, companies and foundations have committed a paltry USD 8.3 billion, or a little more than USD 1 per capita of the world's population, to fight the pandemic in poorer countries of the globe. This is but a drop in the bucket of what will be needed to slow down the spread of the virus. Infections have been recorded in more than 110 countries and even a country with a highly advanced healthcare system like Italy finds itself struggling to deal with COVID-19. By whatever name you call it, coronavirus, novel coronavirus, or COVID-19, its global impact cannot be denied or contained. Tens of millions of people's lives have been turned upside down, and people have lost their jobs, incomes, assets, and mental peace. Researchers at Harvard and Imperial College London estimate that only one-third of the illnesses exported from China have been observed, since those without symptoms are not counted. Global travel and trade are slowly grinding down. Even in the USA, a country that has so far been spared the worst, stock markets have plummeted and tourism has taken a big hit.
For Bangladesh, fortunately, the fury of this virus has not reached our shores much, nor have any of the Chinese citizens working here been infected. However, this should give us more reason to stay alert and step up all precautionary measures. Since most neighbouring countries have reported more cases of coronavirus infections, Bangladesh is now at risk and the Chinese ambassador to Bangladesh has urged all to stay alert, according to a The Daily Star online report. The Chinese Ambassador to Bangladesh, Li Jiming, was critical of the protocol in place to contain the contagion—calling it "unscientific"—and urged the government to step up the measures to keep the virus out. According to various reports, almost 95 percent of new cases of coronavirus are being detected outside China, yet the Bangladesh government had been, until recently, only screening passengers coming from China at the airports. The government should have taken our screening process one step further and monitored all incoming passengers, the airports and other entry points. However, the passengers who recently returned from Italy were not all tested or quarantined successfully.
It is time for the various government ministries, particularly the Ministry of Finance and Health, to make contingency plans. The International Monetary Fund chief Kristalina Georgieva on Wednesday called for an all-out, "no regrets" response to the new coronavirus epidemic, which poses a "serious threat" to the global economy.
"At a time of uncertainty... it is better to do more than to do not enough," she said, warning that the impact of the COVID-19 outbreak will slow growth in the world economy to below the 2.9 percent posted last year.
One of the biggest dilemmas that officials and politicians in low-income countries such as Bangladesh, India, and Pakistan face is the cost of preparing for an impending disaster. There are many scenarios, and the probabilities inherent in these, including the speed of dissemination, can influence the actions that governments take. Also, even though communication with mobile phones and the spread of internet is much faster, the downside is the propagation of false information.
Lessons from the SARS epidemic in 2003 show that the economic impact of coronavirus can be broken down into two segments: direct and indirect. The direct impact will be felt if the country is hit—and that might mean a single death—since the panic will start and gradually transmit to the rest of the country. Bangladesh could possibly avoid this and with a little bit of planning, propaganda, and precaution, limit the damage from the curtailment of economic activities similar to what China, Italy or Iran has seen. Most importantly, conflicting messages from the government, public perception of a lack of preparedness, and uncertainty and suspicion among the masses could lead to widespread panic, rumour-mongering, and economic slowdown.
The indirect effects of the COVID-19 pandemic will be felt by every country since it has already slowed down global economic recovery. The coronavirus onslaught will weigh in on the global economy and will last even after the epidemic has been brought under control, and "it won't end with a sudden burst of blue skies". "The shape of the economy as it absorbs and eventually recovers from the coronavirus epidemic is more likely to be U-shaped than V-shaped—with a prolonged bottom", according to Justin Lahart of the Wall Street Journal. On the positive side, lower oil prices and some possible uptick in world demand for our products as supply chains are rejigged away from China—in the form of trade diversion—could benefit us in the intermediate term. However, the better prepared the country is to fight any sudden outbreak or global lockdown, the faster it can contain and slow down the negative and accentuate the positive that will inevitably follow in the coming months.
Dr Abdullah Shibli is an economist and works in information technology. He is Senior Research Fellow at International Sustainable Development Institute (ISDI), a think-tank in Boston, USA.