Coronavirus stands to clean $3b off Bangladesh economy

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Bangladesh's gross domestic item may contract by as much as 1.1 % in the hypothetical worst-case situation of a substantial outbreak of coronavirus in the united states, said the Asian Development Bank (ADB) in an analysis.

Which means, the novel virus, which is but to reach in Bangladesh, could wipe $3.02 billion off the $300 billion-plus economy. 

In such a scenario, 894,930 jobs will be lost, based on the ADB.

The ongoing COVID-19 outbreak impacts China and other producing Asian economies through numerous channels, including sharp decline in domestic demand, lower tourism and business travel, trade and production linkages, supply disruptions and health effects.

The magnitude of the financial impact will rely upon the way the outbreak evolves, which remains highly uncertain, the Manila-based lender said.

China may be the biggest trading spouse of Bangladesh and the largest source of raw materials. The world's second major economy accounted for greater than a 5th of the country's imports of $56 billion in fiscal 2018-19, Bangladesh Bank data showed.

The world's second greatest economy is also emerging as an export destination for Bangladesh.

Bangladesh receives 5-6 lakh tourists yearly and of them a major portion originates from China.

"There are various uncertainties about the COVID-19, including its economic affect," said ADB Chief Economist Yasuyuki Sawada found in a statement.

This requires the application of multiple scenarios to provide a clearer picture of potential losses.

"We hope this research can support governments as they prepare obvious and decisive responses to mitigate the human being and economic impacts of the outbreak," he added.

The brand new coronavirus disease, now referred to as COVID-19, was first determined in Wuhan, in China in early January. Since then, it has pass on to some other 88 countries by Friday, in line with the World Health Organisation.

The ADB analysis explored three scenarios given the very large uncertainties.

In the best-case scenario, the outbreak is contained comparatively quickly, with travel bans and precautionary behaviour abating after 8 weeks, when the outbreak intensified and quarantines as well as travel and other constraints were imposed.

In the moderate scenario, the outbreak is more widespread and lasts much longer, with travel bans and precautionary behaviour abating simply after three months; you will find a greater decline in China's intake expansion of 2 percentage factors for the year, in accordance with a no-outbreak scenario.

In the worse-case scenario, the outbreak is a lot more protracted, with precautionary behaviour and restrictive policies staying in place for six months; there is a sizable decline in both consumption and purchase progress in China, with both down by 2 percentage points relative to a no-outbreak scenario.

In the hypothetical worst-case scenario, the duration of travel bans and sharp decline in domestic demand will be half a year in China and the outbreak in other developing economies long lasting three months.

In such cases, you will see 2 percentage points decline in China's consumption relative to no-outbreak situation, China's investment in accordance with no-outbreak situation and decline in selected developing economies' domestic consumption.

In the very best case scenario, the country's GDP will eventually lose $8.37 million and there may also be job cuts for 1,870 people. In the moderate and worse conditions, you will see GDP lack of $15.84 million and $30.31 million and job cuts of 3,790 and 6,950 respectively.

"These shouldn't be interpreted as a prediction that an outbreak will occur in any of the economies. In almost all of these economies there are incredibly few conditions of the COVID-19," the ADB said.

Rather, they are meant to guide policy-makers in identifying how costly an outbreak could possibly be, so they can properly evaluate the benefits and costs of prevention and early response.

In Bangladesh, tourism revenues will decline by 0.001 per cent in the best-case scenario, 0.002 % found in the moderate case scenario and 0.003 % in the worst-case scenario.

The number of scenarios explored by the ADB advise a worldwide impact of $77 billion to $347 billion, or 0.1 % to 0.4 % of global GDP, with a moderate case estimate of $156 billion or 0.2 % of global GDP.

Two-thirds of the affect falls on China.

The magnitude of the impact of the lethal, pneumonia-like virus, which is sweeping the world, on Bangladesh's international trade of Bangladesh together with overall commerce -- can't be ascertained yet.

In fact, the real impact would be very clear in March, the finance ministry of Bangladesh said in a document recently.

"There is absolutely no doubt that there will be at least short-term impact. And if the outbreak persists for years, this could have far-reaching impact not merely on Bangladesh but likewise on the global market."

The barriers to imports from China, the epicentre of the virus, will hurt the export-oriented sectors and disrupt the source chain, the finance ministry said, adding that the entire trade may be damaged to some extent because of the coronavirus.
Source: https://www.thedailystar.net

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