Identifying the economic impact of Covid-19

There is no doubt that the pandemic, originating from the global spread of deadly coronavirus, has dealt a severe blow to lives, livelihoods, and economies worldwide. Governments have tried to contain the virus's spread through lockdown measures, rendering the economies vulnerable. Though the first wave of the virus is over and vaccination has already been rolled out in many countries, the world is still far from safe. Many countries, including Bangladesh, face the second wave due to a sudden surge in infection and death rates. Restrictive measures, be it lockdown or shutdown, have been reinforced, though the first wave experience showed mixed results in countries like Bangladesh. A new book titled Coronaghatay Orthoniti O Shromobazar (Corona blow to the economy and labour market) tries to identify the impact of the virus, and its protective measures, on global and local economies. Written in Bengali by Dr Rizwanul Islam, the book is one of the first of its kind that sheds light on the most significant and devastating development in recent human history.
The writer, knowing the vast and complex dimension of the pandemic, keeps his analyses brief and precise. He does not want to elaborate on the technical details as he thinks it is better to 'focus on core areas in short for the policymakers and a large section of people in society who belong to different classes and professions.' No doubt, he has succeeded in doing so, thanks to his lucid presentation.

Dr Islam starts with how lockdown brought the global economy into turmoil as it almost stopped people and products' movement. Using available data and statistics, he depicts a picture of the global economic crisis. He shows that even after containing the virus's spread through lockdown, many countries have failed to arrest the economic slide or recession. As an anecdote, he compares Bangladesh and Thailand. In the book, he shows that despite controlling the pandemic domestically, Thailand couldn't avoid recession. The main reason is that the country's tourism and industry, two vital sectors, are largely dependent on the external economy. As regards Bangladesh, agriculture and non-farm rural economic activities still play a critical role in the the country's economy. There were little negative impacts of Covid or lockdown on these sectors. Again, despite reduced overseas employment, those who worked outside sent a good amount of remittance, which helped to check any significant decline in aggregate consumption. That's why, the writer argues, Bangladesh economy did not fall into a deep recession like Thailand. He, however, cautions that it is still not possible to draw any firm conclusion on the relationship between the pandemic, lockdown and economic recession or growth (p-29).
The writer emphasises the employment situation or labour market to understand the negative impact of Covid-19. He shows that though economic downturns generally affected the labour markets adversely, not all countries have been affected in the same manner during the Covid-induced recession. For example, as he illustrates in his book, unemployment rate increased in the United States sharply during the spring of 2020. At the same time, countries like France, Germany, and the United Kingdom could avert such sharp rise in unemployment. In case of developing countries, the book also mentions that India experienced a sharp rise in the unemployment rate during the period of strict lockdown. China, however, has been able to avoid such a situation.
After analysing the different measures to contain the spread of the virus, Dr Islam concludes that not all countries take the Covid-19 seriously, and in some countries, those who were in power mixed it with politics ignoring the scientific viewpoint. In these cases, the economic aspect got much attention (P-47). He also argues that one critical lesson of the pandemic is that it is not wise to see health-related matters and the economy separately. Instead, Covid-19 has tested the importance of access to public health, preparedness and quality delivery even in the developed countries.
Focusing on Bangladesh, the writer shows that employment in the country has been hit hard due to the pandemic. Based on the available job and other economic data, the writer estimates that at least 13.50 million people lost their jobs or did not have any work during the lockdown-- termed as public holidays in 2020. The number is equivalent to one-fifth of the labour force at that time (P-65). He also finds an erosion of real wage, which means the situation of labourers and workers deteriorated further. He rightly argues that Bangladesh's labour market has been adjusting to the economic crisis at least in two ways. One is by terminating workers, and another by cutting the real wage (the second way is not increasing the nominal wage or increases it at a rate below the inflation rate).
Dr Islam believes that the most negatively affected people in the crisis include ordinary labourers, garments-factory workers, transport workers, especially rickshaw and van pullers and small traders. As there is no social protection for them and only a tiny section receives the perk from the government social safety net, they have to rely on their little savings or relatives to cope with the crisis (P-70-80).
Again, the book analyses the recovery of the economy and saving jobs through stimulus packages in different countries, including Bangladesh. The author finds the steps to provide economic recovery schemes in Bangladesh were not managed in an orderly manner. He argues that cash support for the poor should come first while it came almost at last. Lack of preparation, administrative limitation and greedy behaviour of different quarters turn a good programme into a near unsuccessful one (P-87).
An essential aspect of the book is the writer's effort to examine Covid-19 as a grand equaliser-- as many people have dubbed it so. From the very beginning, many social scientists and economists have argued that as the virus spares none, from high profile people to marginalised ones, the disease would act as a grand equaliser in the near future. Dr Islam tries to examine the validity of the proposition in short and concludes that the deadly disease has a minimal role in reducing prevailing inequality in society (P-88) and may ultimately enhance economic discrimination (P-98).
Finally, Dr Islam argues that the revival of Gross Domestic Product (GDP) growth should not be the core focus of economic recovery. Unfortunately, policymakers in many countries, including Bangladesh, are still obsessed with the GDP growth rate. He, thus, argues that there should be a sustainable reduction of poverty and inequality coupled with ensuring decent work. There should also be universal social protection, primary health service and education.
Dr Rizwanul Islam, an economist by profession, has a long experience in the labour market and labour related issues. He worked as a special adviser in the International Labour Office (ILO) for a long period. That's why his works on the economy and labour market are found insightful and thought-provoking. The book is a reflection of such insight.
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