Lack of mass jabbing feared to slow down economic recovery

Despite the economy showing some signs of recovery in the fourth quarter of 2021, the non-availability of mass vaccination may become one of the critical factors for slower economic recovery in Bangladesh, fears the Metropolitan Chamber of Commerce and Industry.

MCCI in its latest quarterly review also observed that Bangladesh, like many other countries, struggled with the number of infections and the new normal of Covid-19 measures such as social distancing, wearing masks, virtual meetings, online classes etc. since reporting its first case on March 8, 2020. As a result, people across all socioeconomic backgrounds have been adversely affected, including ours.

Nevertheless, the economy has been showing some signs of recovery in the fourth quarter of FY21. The stimulus packages comfort the business groups, from large firms to petty micro-enterprises, which eventually helped boost the economy, reads the MCCI review.

Exports and remittances are two critical drivers of the economy, and amid the Covid-19 pandemic, both areas have done well.

Robust remittances and export earnings had facilitated Bangladesh’s economic recovery in the just-concluded fiscal year.

Year-on-year, exports in FY21 grew by 15.10 per cent and remittances grew by 36.11 per cent, the MCCI said in its Review of Economic Situation in Bangladesh April-June of the FY20-21.

“However, the recovery period is uncertain, but much depends on vaccination and the strength of the global economy. The non-availability of mass vaccination may appear to be one of the critical factors for slower economic recovery,” warns MCCI.

The inward remittances have a substantial positive impact on the rural economy to sustain the domestic consumption demand, which has multiplier effects on other economic sectors, especially the small and medium industries.

The rate of inflation is under control and the foreign currency reserve is in a good position. The exchange rate has long remained stable while the balances of payments are also on a positive trajectory, said MCCI in its review.

The consequences of Covid-19 pandemic and multiple lockdowns since March 2020 have slightly pushed Bangladesh off its growth trajectory.

On the other hand, some of the economic indicators appear to be less promising than projected earlier. The fiscal framework continues to be weak in view of poor achievements, more specifically, both in terms of revenue mobilisation and public expenditure.

The unemployment situation and low investment is also a challenge. A significant increase in public and private investment is necessary to maintain competitiveness and generate further growth.

The policymakers need to focus on strategies for post-Covid-19 recovery and concentrate on policies to upgrade various private sectors so that more successful revenue-earning streams can be generated and

attract reinvestments from existing investors, opined the latest quarterly review of the MCCI.

The industrial sector registered a growth of 6.12 per cent in FY21, which was 3.25 per cent in FY20. Besides, the industry sector’s share in GDP increased slightly by 0.21 percentage points to 34.99 per cent in FY21 from 34.78 per cent in FY20.

In the broad industry sector, the manufacturing sub-sector registered a growth of 5.77 per cent in FY21, compared to the previous fiscal year’s 1.80 per cent.

The power supply situation improved in the quarter under review but the demand for power also increased.

The service sector has already started its activities during the pandemic and contributed to boosting Bangladesh economy except for education. The sector, however, recorded a higher growth of 5.61 per cent in FY21, compared to 4.16 per cent in the previous fiscal year.

About Foreign Direct Investment, MCCI said, FDI inflow in Bangladesh is low compared to that in many countries at a similar level of development.

Stocks in both Dhaka and Chittagong stock exchanges performed well on June 30, 2021, the last trading session of FY21, despite the rising trend of virus infections and deaths in the country. According to the market operators, the regulatory decision to keep the market open amid strict countrywide lockdown and keep the investment opportunity of undisclosed money in the capital market had worked behind the market’s rise.

The central bank has already sent limits to all scheduled banks, like the previous year, to execute the second phase to help revamp the coronavirus-hit economy, MCCI said about stimulus packages.