Bangladesh economy went through a turbulent bumpy ride throughout 2020 that saw lower export growth, less revenue collection, paucity in private sector investment and skyrocketing bank loan default and the shattered stock market. However, against the tide of these negative aspects, 2020 was also marked with record remittance inflow hitting $43 billion and resilience showed in agriculture production despite some drawbacks as producers failed to get the fair price of their harvest.
At the beginning of 2020, as the nation was starting to turn around from previous year's weak investments and continued the fight of achieving 8 percent-plus GDP growth, coronavirus doused the hope leaving the economy in the lurch as businesses almost entirely halted for nearly four months. It forced industrial production to come to a screeching halt leaving many jobless and a significant drop in purchase-power and dragging 49.43 million people below poverty line.
To rescue the country's economy ravaged by the pandemic, the government quickly jump into action by rolling out 111,141 crore taka (3.7 percent of the country's total gross domestic product GDP) massive stimulus package in 20 sectors. Development partners also extended helping hands to pull the economy out from stagnation and by June economy started to show signs of slow recovery as the wheels of engines started to move again.
Major breakthrough in coronavirus vaccine invention in the latter part of the year became a silver lining to people and economy.
Former lead economist of World Bank, Zahid Hossen said the vaccine will help the economy turn around as vaccination process has already started in several developed countries and hoped Bangladesh will soon follow suit.
However, the economy will go back to normal again if a sufficient number of people are vaccinated to achieve herd immunity, said Zahid Hossen.
He also said, “There is a sense of insecurity among the investors given the current environment caused by Covid-19. Once it evaporates, the suppressed demand among the consumers will flourish again which will create a new tide in our economy.”
World Bank, Asian Development Bank, International Monetary Fund and other development partners lauded the government’s rolling out of stimulus package and social safety net programmes to repair the economy, despite having shortfall on health and pandemic management.
Export is growing slowly; private sector activities are showing promise again. Additionally, completion of the main structure of Padma Bridge sent a positive vibe in the country as it is expected to add 1.2 percent GDP in the country's economy by opening new horizons of trade and investment in the South-Western regions of the country.
Poverty and employment status
Bangladesh Bureau of Statistics (BBS), Bangladesh Institute of Development Studies and other Non-Governmental Organization (NGO) statistics suggest that unemployment increased significantly in the country during April to June period snowballing the poverty rate. Again, however, from July onward there has been some progress in new job creation but still far away from post-pandemic situation.
In BBS data shows that 24.3 percent people lived under below poverty line in 2016, which was targeted to be brought down to 20.5 percent by June 2019. However, it wasn’t achieved, rather inflated the number to 29.8% in June 2020 thanks to the pandemic. Extreme poverty also doubled in the same period and ended up at 20.5 percent.
BBS survey conducted by telephone survey shows 4.2 percent people were unemployed in 2017 which grew to 22 percent in April-July this year. However, many NGOs disputed the BBS figure and painted a much grimmer picture in the employment rate.
Export-Import
As Bangladesh went into lockdown on April 26, export earning hit the bottom in April which was $52 crore contracting 83% in compare with the same period of the last year which was continued in May. Export earning growth of the last five months of the year was only 1 percent.
On the other hand, banking sector kept a healthy growth with the help of sufficient flow of liquidity and lack of investment which fattened the bank reserve.
Stock market too remained stable as of today as the main Index increased 1000 points.
Despite a wide gap between projection and earning, revenue collection increased 4 percent over the last five months.
Simultaneously, the pandemic took a heavy toll on import as from June to November it shrunk 9 percent which paints a grim picture of the lack of investment in industrial sector. Import of capital machinery tools alone declined 29 percent which tells the reality of stagnation in investment and creating jobs.
Foreign direct investment also declined by 43 percent but foreign loan increased manifolds to tackle the shock spilled over on every aspect of the economy instigated by the pandemic.
Agriculture sector showed resilience during the pandemic as Boro season was marked with bumper production although Aman harvest suffered a blow caused by flash floods that swept through different parts of the country. Inflation increased in the middle of the year as the price of rice and vegetable was high due to flood damage to new crops – in November inflation crossed 6 percent.
The sudden ban on Indian onion also pained the consumers as price hit 200 to 250 taka per KG. Amid the availability of winter vegetables, kitchen markets saw stability although price rise increased slightly.
Digital transaction and dependency on online platform for shopping increased along with the trade of safety gears in the pandemic period.
Considering all factors involved, economists are, however, hopeful about a V-shaped recovery in the country as the government is planning to administer vaccine by the first quarter of the next year which will help to put the economy back on track.
sh/zn
