Is Bangladesh economy facing headwinds?

Bangladesh economy began the New Year with both good news and news not so encouraging. The good news was the surge in remittance by wage earners that soared to $12 billion in January this year. The uptick was credited to both increasing number of wage earners working abroad and the 2.0 per cent cash incentive given on money remitted through official channels. Among other good news was the ongoing implementation of mega projects like Padma Bridge and others. The development that gave cause for concern was the fall in overall exports in which garments, the star performer accounting for 85 per cent of exports, figured prominently. Slack in revenue collection that led the government to borrowing from banks and huge amount of non-performing loans (NPLs) were other weaknesses that characterised the economy at the start of New Year. The beginning was not very bright by any measures but the Bangladesh economy has its proverbial resilience to engender hope that the worse would be avoided and the negative circumstance would be weathered.
But no sooner have the existing problems spilling over from the last calendar year began to be addressed than appeared a formidable challenge from across the border. Granted, the challenge from or threat of coronavirus is a global one, potentially facing all countries, Bangladesh will have to devise ways and means to tackle it alone, if it strikes and assumes serious proportions. As of now, Bangladesh has been spared from this scourge but with increasing number of countries being affected by the virus we cannot remain complacent. The World Health Organisation (WHO) that declared the respiratory disease as a public health emergency has now upgraded the threat as 'very serious', short of declaring the outbreak as 'pandemic'.
Bangladesh may have been spared the outbreak of the viral attack but our economy has already been hit by the damages wrought by it abroad. According to Bangladesh Trade and Tariff Commission, 14 sectors of the economy are already facing problems because of disruptions in manufacturing industries caused by the disease abroad, particularly in China. The Commission has estimated as a result of probable fall in imports and exports several sectors are likely to suffer loss to the tune of Tk 6.0 billion in the near future. Shortage of the supply of raw materials has reportedly threatened to close down operations in different industries in the manufacturing sector. Declining supply of goods through imports for consumers has also started to hit the market. It is apprehended that if the crisis prolongs the import-export transactions of the country may be squeezed adversely affecting production and consumption.
Bangladesh Trade and Tariff Commission has identified 14 sectors that will be affected by damages done by coronavirus abroad even if does not strike Bangladesh. Among the 14 sectors are garment industries, leather and leather products, cosmetics, electrical goods, jute spinning, printing industries, medical equipment, optical instruments, computer and its components, electronic goods and plastic industries. According to Policy Research Institute those industries which are involved with global supply chain are already suffering from reduced volume of imports and exports. Industries and projects employing Chinese technicians are also affected as those of their Chinese employees who had gone home on leave have not returned. The various chamber of commerce and industries are collecting information from their members regarding the problems faced by them in the wake of the new viral disease. As the main supplier of goods is China and export from there has been stopped following closure of industries Bangladesh producers are already feeling the pinch.
According to Bangladesh Trade and Tariff Commission exporter of leather and leather goods are apprehending of loss of Tk 3.0 billion as a result of the stoppage of exports to China which accounts for 65 per cent of the export market. According to preliminary estimate by the commission Bangladesh may lose about Tk 6.0 billion across several sectors (Bhorer Dak, March 01).
According to another newspaper the implementation of several mega projects, including Padma Bridge, have been affected because of disruptions in supply. As more than 2000 Chinese workers are employed in Padma bridge project, Pyra power plant, Chittagong-Cox's Bazar rail project, Dhaka bypass project and many of them have gone to China on leave may cause setback to the projects (Jai Jai Din, March 01). The paper has also mentioned that coronavirus may have adverse impact on remittance by wage earners as some of the countries where Bangladeshi workers are employed have been affected by outbreak of the disease. If this happens it will be a heavy blow because the cushion to absorb the fall in exports by garments has been wage earner remittance. During July-January of current fiscal, remittance increased by 21 per cent which far exceeded the earnings of 9.5 per cent during the corresponding period during last fiscal. It can be well imagined what a disaster for the economy it would be if remittance declines all on a sudden.
According to Bangladesh Trade and Tariff Commission revenue collection through customs duty has already fallen as import from China has almost stopped since the outbreak of coronavirus there. According to the Commission revenue collection fell by 26 per cent during the last one month after the import from China through Chittagong port stopped as a result of which Tk 5.0 billion (500 crore) less has been collected than targeted for the period.
It is seen that the damages caused to the economies by coronavirus in the countries that have been affected by it, particularly by China, has started spilling over into Bangladesh economy. So far the situation resulting from decline in imports and exports is not grave and a crisis situation has not arisen. But if this situation continues further, resilience of Bangladesh economy will be severely tested.
According to a newspaper report the Ministry of Finance has prepared a report which has pointed out that increasing volume of remittance, implementation of mega projects and accelerated expenditures for ADP (Annual Development Programme) projects will help keep the economy on an even keel, making it possible to achieve the projected GDP (gross domestic product) growth at 8.2 per cent. Though the negative impact of coronavirus on imports and exports has been acknowledged in the report of the Finance Ministry the beginning of disruptions resulting from supply chain has been minimised. This is acceptable in the interest of confidence building but we should be prepared for the worst. An emergency plan should be drawn up by the government in collaboration with the apex body of chamber of commerce and industries. The last thing that is expected in an abnormal situation like this is an ostrich-like attitude. Bangladesh economy, like others, is clearly in the crosshairs of the scourge that is stalking almost at free will, striking country after country. Being complacent, under the circumstances, will be unconscionable.

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