ADB on Bangladesh: High outbreak of Covid-19 may hurt economy

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The country's economy will suffer a lot when there is a substantial coronavirus outbreak, the Asian Development Bank said yesterday.

The warning came on the 9th day of the nationwide shutdown targeted at slowing the spread of the highly contagious disease. However, the shutdown suspends many economic activities and puts a large number of jobs at risk.

The Manila-based multilateral lender early last month said the Covid-19 pandemic could wipe out $3.02 billion off Bangladesh's $300 billion-plus economy in the worst-case scenario of a substantial outbreak.

In such a scenario, 894,930 jobs will be lost, according to last month's ADB analysis.

ADB yesterday said its preliminary estimates indicate that about 0.2 percent to 0.4 percent of Bangladesh's GDP may be lost because of spillover effects of the global Covid-19 pandemic.

"If a substantial outbreak occurs in Bangladesh, the impact could possibly be more significant. The outlook will be updated as more info becomes available," said ADB Country Director in Bangladesh Manmohan Parkash in a statement.

With the spread increasing gradually, Bangladesh economy has started going for a hit. Exporters say that international orders are being cancelled while importers say that their businesses have declined.

In March, remittance inflows were $1.28 billion, a 12 percent drop from the same period this past year, according to Bangladesh Bank data.

ADB said Bangladesh economy continued to execute well regardless of the global monetary slowdown. "However, there exists a downward risk as a result of COVID-19 global pandemic."

Parkash appreciated the government's recent interventions and said, "Addressing cash management challenges and broader resiliency issues because of Covid-19 related shutdowns and economical knock-ons could help minimise effect on Bangladesh economy."

Bangladesh economy showed strong performance with growing domestic demand, supported by substantial upsurge in workers' remittances through the first 8 months of the existing fiscal year.

"However, the COVID-19 pandemic could hamper such trend because of disruptions in export demands, suppressed consumption, and curbed remittances."

In its Asian Development Outlook (ADO) 2020, which will not reflect the impact of the COVID-19, the ADB said Bangladesh economy might remain strong in the 2019-20 fiscal.

The gross domestic output of the united states would grow by 7.8 percent in the current fiscal year, ending on June 30, it forecasts.

These growth forecasts rest on several assumptions of continued political calm, maintained consumer and investment confidence, depressed exports and imports and recovery in the next fiscal,expansionary central bank monetary policy, and favorable weather, said the ADO.

Low revenue collection is still a key challenge for the economy it adds.

"The low revenue to GDP ratio in Bangladesh diminishes the country's capacity to sustain high monetary growth and reduce poverty. Revenues thus ought to be raised significantly through comprehensive tax reforms, by expanding the tax base and making resource mobilization more efficient to aid much-needed public expenditure on infrastructure, health and social development."

In a facebook post, Towfiqul Islam Khan, senior research fellow of Centre for Policy Dialogue, said the ADB report did not consider the impact of coronavirus on Bangladesh economy, but it considered the impact of the pandemic on the economies of all the other countries in Asia.

"So in my own view, Bangladesh's growth forecast is not comparable to almost all of the countries," he wrote.

"We should not focus on GDP at this moment. Our full attention ought to be on saving and protecting lives and livelihood of the marginalised people. We have to also plan for an monetary recovery to be implemented after winning this ongoing war against the pandemic. GDP growth can wait."
Source: https://www.thedailystar.net

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