Life crippled, economy bleeds

Life gets crippled and the economy continues to bleed amid unrelenting violence following the anti-discrimination student movement that severely disrupted business and economic activities across the country, businesses and economists said.

Such disruptions to trades and businesses come at a time when the $460-billion-plus economy of Bangladesh was steadily rebounding from multiple macroeconomic strains caused by the Covid-19 pandemic, the Russia-Ukraine war that triggered serious disruptions to global supply chains, volatile forex market followed by energy crisis in the manufacturing units.

As the government reinforced full-scale curfew across the country alongside shutting all government and private offices to cool down the escalating flare-ups of violence on Sunday, it means the economic activities will be completely upended.

Under such circumstances, entrepreneurs and economists said, the situation now persisting across the country comes as the 'last nail to the coffin' with an almost shutdown of business activities.

They also fear spillover effects of the killings and violence already started hitting the economy as the European Union (EU) recently postponed negotiations with Bangladesh on a new cooperation agreement after criticism of Dhaka's response to contain deadly protests, which will "undoubtedly" affect exports to the 27-nation economic bloc.

"This is the worst situation that we are passing through," Executive President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatem told the FE.

The business leader said the entrepreneurs were planning to put more money into business in early 2022 when the export growth of the clothing industry found a rebound after the pandemic.

Within few months, the Russia-Ukraine war broke out, disrupting the global macroeconomic order. Again, the private-sector players managed the situation and started growing amid the persisting energy crisis, especially gas shortages.

"The ongoing crisis following the nationwide student protests put us in a serious trouble. It's like the last nail to the coffin as all the production units are now shut because of the violence and curfew imposed by the government to contain the chaos for indefinite period," he said.

He mentioned that the EU already suspended discussion on a new pact with Bangladesh in the wake of the unrest, which would have an adverse impact on exports of Bangladeshi products to the EU markets.

Former lead economist of World Bank's Dhaka Office Dr Zahid Hussain says there is a certainty that the economy continues worsening.

"But the question is how deep and long the bleeding will continue because every minute the situation keeps changing from bad to worse," he notes.

The eminent economist observes that the whole nation passes through a crisis time. "If the bleeding is not stopped immediately, it will be disastrous for the economy as there is no sector in the country not impacted by the troubles.

The economy will incur huge losses following the closure of all economic and financial units, says Dr Ahsan H. Mansur, executive director of the Policy Research Institute of Bangladesh (PRI).

He rates the losses as irreparable in the coming months. Whoever takes power, they will inherit the losses. "It cannot be overcome," the noted economist notes on a note of concern over the ongoing street faceoff.

He forecasts Tk 300 billion worth of economic losses to be suffered in the next three days when all economic activities will halt.

He mentions that earlier the economic losses were at least Tk 1.0 trillion during the last phase of halting economic activities.

Day-labourers or people who depend on daily earnings will be the worst sufferers. Once the factories remain closed, the manufacturers face problems on two fronts: how to make shipment and how to pay the employees.

Under such situation, he fears, the International Monetary Fund (IMF) and other lenders may postpone their activities for the next round of instalment from the Bretton Woods Institution.

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