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Sunday, November 22, 2020

Economic impact to be much bigger, warns economists

Al Amin :
The economists and businesses have apprehended that second wave of the Covid-19 pandemic would affect the country's economic pillars-export, investment and private consumption-severely as the tenure of the wave likely to be longer.
The warning from the economists came against the backdrop of measures taken by many countries around the world, from England, France, Spain, Germany and the Czech Republic to Iran and South Korea, where they have reintroduced either lockdowns or equivalent steps amid rising the virus infections and deaths.
These countries have already squeezed overall supply and demand due to the impact of the second wave of the pandemic, resulted the adverse impact on Bangladesh's export and investment.
 The Health Minister Zahid Malek has said that the second wave of Covid-19 pandemic has already hit Bangladesh and the health department has taken necessary preparation to tackle the situation.
Expends said the economic damage is likely to be much bigger this time than done in the first phase as that was started in our country at the ending period of the winter season, while the second phase is starting at the beginning and it may be longer than the previous one.
 According to BBS data, the economic growth was 5.24 in the last fiscal year due to the pandemic, when global economies are experiencing the worst crisis since the Great Depression in the 1930s. The World Bank, however, in June predicted that Bangladesh's GDP growth would come down to only 1.6 per cent from a high flying
 8.15 per cent.
The second wave has already reduced the export orders of the readymade garment sector by 30 per cent as the buyers of the western countries have started squeezing the rein of their purchases orders.
The garment exports decreased by 7.22 percent in the first half of the current month compared to the same period of the last year, according to the BGMEA data.
"Export, investment and private consumption sectors will affect severely very soon as the consumers' confidence is reducing gradually," Zahid Hussain, former lead economist of the World Bank Dhaka office, told The New Nation over phone on Saturday.
On the other hand, Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), said the country will witness negative economic growth till next February.
He further said it will be difficult to face the second wave of the pandemic as it is likely to be longer, although the increasing remittances and export earnings are still playing important role in the country's economy.
The actual economic growth will be lower than the projection of the World Bank and the IMF as business activities may not be resumed properly before June of the next year, he added.
He further said the export-oriented industries have been going through uncertainties and there was a need to give encouragement to the domestic sector.
Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), said low business activity and the resultant low income from businesses would reduce tax collection of the National Board of Revenue (NBR).
The revenue collection in the just-concluded fiscal year dropped by 2.26 per cent to Tk 82091.06 crore and this is first-ever negative growth in Bangladesh's history, when viewed against the backdrop of the pandemic.
"This, in turn, will reduce the fiscal space of the government and may constrain the government's expenditure," she said.
The second wave will hit hard the cottage, micro, small and medium enterprises (CMSMEs) again, she apprehended.
Mohammad Hatem, Senior Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the country's economy was vibrant more or less till October due to the efforts of entrepreneurs, the hard work of working people and the cooperation of the government.
But, now it will too difficult to face the impact of the second wave for the exporters, he added.