Concerns grow over exports as coronavirus hits global economy

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A possible global economical slowdown as a result of the spread of coronavirus to a big number of countries, including Japan, Italy and america, has turned into a new headache for Bangladeshi exporters, who have already been affected due to problems in importing recycleables and capital machinery from virus-hit China.

The spread of the virus in new countries over the last couple of days is mounting up the fear of a global financial crisis and standstill among the economists, authorities and traders globally.

Economists and exporters said that as the coronavirus was spreading to many more countries, it might bring an enormous shock to the export earnings of Bangladesh if the virus became a worldwide pandemic and was prolonged.

Spread of the virus to Bangladesh will be devastating for the export sector, they feared.

A possible global economical slowdown because of uncertainty in production, disruption in supply chain and decrease in demand in the global market may severely affect Bangladesh’s export and its overall economy, they said.

They, however, said that the possible impact was yet to be clear and the problem would become clear by March based on to what extent the spread of the virus could possibly be contained or the amount of spread.

The country’s exporters, economists and government entities have so far assessed the impact on export because of disruption in supply chain from China.

China, where in fact the outbreak started in December this past year, is the single major supplier of industrial recycleables for readymade garment and other sectors of Bangladesh.

Now, the fear is being intensified as the quantity of affected people is increasing in the already damaged countries and the virus is spreading to more countries in Europe and North America, the destinations of the largest portion of Bangladesh’s export of apparel and other products.

The cases of coronavirus infection are increasing in Italy, the united states, Germany, France, Japan, Spain, the Netherlands plus some other countries.

The US may be the major market for Bangladesh exports, especially the readymade garment products, with the full total proceeds standing at $6.8 billion within the last financial year 2018-19 while Spain is the fourth major market, Italy sixth and Japan seventh.

Export earnings from Spain stood at $2.2 billion in FY19, from Italy $1.64 billion and from Japan $1.3 billion.

In line with the global media reports, the coronavirus outbreak commenced to look similar to a worldwide economic crisis Friday as anxiety about the infection emptied shops and amusement parks, cancelled events, cut trade and travel and dragged already slumping financial markets even lower.

The wide-ranging efforts to halt the spread of the illness threatened jobs, paychecks and profits.

The set of countries touched by the condition climbed to practically 60 as Mexico, Belarus, Lithuania, New Zealand, Nigeria, Azerbaijan, Iceland and the Netherlands reported their first cases.

Europe’s economy is teetering on the edge of recession. A way of measuring business sentiment in Germany fell sharply the other day, suggesting that some companies could postpone investment and expansion plans, reports said.

Stock markets all over the world are continued to plunge wiping out trillions of dollars.

Centre for Policy Dialogue distinguished fellow Mustafizur Rahman on Saturday told MODERN that the World Bank and other international agencies revised downward the global monetary growth projection for the existing fiscal year.

‘It is clear that the global economy is heading towards a slowdown, though not recession, as trillions of dollar just destroyed from global stock markets on concern with further spread of the virus.’

It could affect global economies, particularly export-oriented countries like Bangladesh, if the COVID-19 virus further spreads and prolongs, he said.

But, the glad tidings are that the spread of the virus has low in China, the foundation of the virus outbreak, said Mustafizur.

Actual effect on Bangladesh export is yet to be assessed as it will rely upon the developments surrounding the outbreak, he said.

He said that Bangladeshi exporters and the government should be alert, rather than being panicky, to handle the crisis through diversifying the source of recycleables procurement and other measures.

But, the main priority is usually to be remaining cautious to ensure that the virus can't be spread to the united states, he added.

Policy Research Institute executive director Ahsan H Mansur said that it would affect Bangladesh’s export and the economy if the virus became a worldwide pandemic.

But, the most devastating impact Bangladesh would face if the virus reaches Bangladesh as global buyers may be fearful to stay in the united states, he said.

‘It is the biggest fear now if the virus spreads to the united states,’ he said.

Globally each is in fear of pandemic and afraid of huge shock to trade and economy due to new suspects in new countries, he said.


 
Earlier, the Bangladesh Trade and Tariff Commission in its report said that the epidemic could put an enormous negative impact on Bangladesh’s export and import.

In line with the report, 13 sectors, including export-oriented RMG, leather and leather goods, apparel accessories, cosmetics, electrical goods, jute, medical equipment, electronics goods and plastic goods, might face the blow.

The leather sector alone may face a lack of Tk 3,000 crore because of the epidemic, it said.

Supply chain for the apparel sector will be severely disrupted as 60 % of woven fabrics and 15 per cent to 20 % of recycleables for knitwear result from China, it said.

According to the National Board of Revenue, imports from China declined by 21 % in the period between January and February 15 of the existing fiscal year 2020 compared with that of the same period of the last FY19 because of a supply disruption following epidemic.

Md Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association, said that if the coronavirus soared in Europe and America like China, it would affect Bangladesh’s export severely.

Not only export from Bangladesh, the financial activities in across the world would face a significant crisis, he said.

Fazlul hoped that the European countries including Italy would in a position to battle the coronavirus situation and financial activities wouldn't normally be hampered.

Anwar-ul-Alam Chowdhury Parvez, former president of the Bangladesh Garment Manufacturers and Exporters Association, said, ‘We have no one thing to say but pray to the Almighty for saving us from the epidemic as the crisis is not created by humans.’

Source: https://www.newagebd.net

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