Don't push economy off the cliff

Atiqul Kabir Tuhin | Published: August 03, 2024 20:54:02

From an economic perspective, the month of July 2024 will be remembered as a particularly challenging one. Not since 1971 has unrest over a non-political issue so badly affected the economy. There are various estimates of how the two weeks of student movement and subsequent imposition of curfew and internet shutdown has cost the country billions of taka. According to Foreign Investors' Chamber of Commerce and Industry (AFIC), the curfews and Internet shutdown to quell the student protest over a government jobs quota is estimated to be around $10 billion. The e-Commerce Association of Bangladesh (e-CAB) revealed on Wednesday that the country's e-commerce sector lost a whopping 17 billion taka over the last 13 days due to Internet and Facebook shutdown. The costs are expected to escalate even further as resentment continues to grow over the heavy-handed response to the protesters.
Even though the government is trying to restore normalcy by gradually opening Internet and physical connectivity, the economic slowdown is clearly evident. Businesses are rapidly coming to a standstill and various stakeholders in the economy such as traders, entrepreneurs, producers, and exporters, are facing substantial losses.
The suffering of common people, particularly the daily wage earners, whose purchasing power has been undercut by their loss of income and escalating prices of essentials, is obvious. The poor and marginalised groups are always the worst hit in any crisis due to their limited coping capacity. The industrial growth has been stymied and job creation is virtually non-existent amidst the looming threat that existing businesses are under pressure to downsize their work-force to reduce costs.
The investment scenario in the country is looking dismal and it is unlikely to improve in the short term. Domestic and foreign investors will not be willing sink their money in an economy that looks vulnerable. It is common sense that investors stay away from markets that do not provide a safety net and assurance of return on investments.
Protracted unrest is also seriously undermining the garments industry - the biggest cash cow for Bangladesh. Foreign buyers are growing weary of shipments not meeting their deadlines and some, reportedly, are shifting their orders to other countries. According to a US study, American fashion companies are now actively diversifying their apparel-sourcing base and exploring opportunities especially in India amid the growing risks and market uncertainty in Bangladesh. It cites shipping delays and supply-chain disruptions and 'managing geopolitics and other political instability' related to sourcing which have newly emerged among US brands and retailers as top five concerns in 2024.
Meanwhile, the European Union, Bangladesh's largest export market, has postponed a new partnership pact, citing the country's ongoing unrest. Additionally, the American agency S&P has downgraded Bangladesh's creditworthiness, both of which are likely to have severe economic repercussions.
Politics and economy have an umbilical connection. One does not have to be an Einstein to know that when one becomes distressed, the other is also affected. In successful countries both go hand in glove, economic prosperity occurring as a natural accompaniment of political progress. One cannot happen without the other. Effective politics are an essential part of managing the economy. A government busy taming unrest, handling political crisis, and pre-occupied addressing potential threats to its power, cannot adequately focus on managing essential economy issues, but one can hope and pray.
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