Economy feels the heat of coronavirus
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The domestic economy has began to feel heat of coronavirus due to disrupted supply from China. Industries across China have halted businesses as a result of deadly virus outbreak, affecting way to obtain raw materials to producers all over the world, including Bangladesh.
The situation in China has also led the bilateral trade between Dhaka and Beijing to near standstill, insiders said. Local manufacturers and industries such as garments, steel, cement, plastic, electronics, food, medicine, cosmetics and chemicals import raw materials and intermediate goods, from China and supplies to these sectors have already been disrupted.
Industry representatives have expressed concerns to the end urging the government to chalk out steps to handle the situation.
"Several key sectors in Bangladesh economy depend heavily on imports from China, where production has come to a near-halt as a result of supply disruption," former President of the Federation of Bangladesh Chambers of Commerce and Industry ( FBCCI) M Shafiul Islam (Mohiuddin) told THE BRAND NEW Nation.
He said even shipments from Bangladesh to China have been halted as a result of coronavirus outbreak creating losses to exporters.
"The disruption in way to obtain raw materials makes things worse for domestic clothing industry together with falling garments exports," Vice-President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). M.A. Rahim (Firoz) told THE BRAND NEW Nation.
Bangladesh imported textiles and other recycleables from China worth $5.02 billion during fiscal year 2018-19, according to BGMEA.
Besides, about 40 per cent of the administrative centre machinery and spare parts for the textile and garment industry comes from China.
"Local apparel industry meets almost half its raw materials requirement from China. If supply chains remain disrupted throughout March, many garment factories will be closed," warned Firoz calling for immediate government measures to save the country's major export sector.
Garment export contributed 84.21 % to Bangladesh's total exports income of $40.53 billion within the last fiscal. Total garment exports amounted to $34.13 billion posting an 11.49 % growth through the period, according to the Export Promotion Bureau (EPB).
"The deadly virus has brought a large area of the world's second-largest economy, China, to a standstill and its own impact has been felt across global economy. Being an integral part of global economy, Bangladesh in addition has started to feel the heat of it," economist Dr Zahid Hussain told THE BRAND NEW Nation.
Referring to a Tariff Commission report, he said, the Commission has recently assessed Tk 6,000 crore possible losses in key five domestic monetary sectors. "It is also working to examine possible losses in 10 other sectors amid mounting concern over the virus fallout by the industry bodies."
The Commission has recently submitted its interim report to the Commerce Ministry. "Right now China may be the greatest trade and investment partner of Bangladesh. The united states is also implementing several mega projects, including Padma Bridge, here involving many Chinese nationals. So, the effect on the Bangladesh economy could become extreme in the event of a lingering coronavirus crisis in China," noted Dr Zahid.
When asked, he said the united states garment sector may be the most susceptible to the coronavirus impact when China is the main raw material supplier. But other commercial sectors like leather, jute, garment accessories and packaging could also bear the brunt as a result of supply disruptions.
To offset China effect, Dr Zahid suggested the neighborhood manufacturers to find alternative raw materials suppliers. Bangladesh's total raw materials and other imports from China reached $13.65 billion last fiscal. "The virus outbreak has recently afflicted the Sino-Bangla bilateral trade. Besides, a knock-on aftereffect of the trade disruption is expected to have an adverse impact on our outbound shipments," said economist Dr AB Mirza Azizul Islam.
"Local manufactures are passing their days in deep fear because of uncertainness on the Chinese supply. The opening of letters of credit (L/Cs) for importing industrial raw materials was already affected. If the coronavirus epidemic lingers on in China, it will cause a further delay in supply and can certainly affect production of local industries," FBCCI Vice-President M Siddiqur Rahman told The New Nation.
He cited, "Bangladesh's apparel production will hit the most and the national economy will eventually bear the brunt of it."
Besides, prices of several commodities and consumer goods imported from China have previously spiked in the domestic market in conjunction with the supply disruption.
In this example, economists have urged the federal government to explore alternatives to overcome the problem.
"For Bangladesh, China is an important trading partner and policymakers ought to be more 'watchful' of the developments that are occurring," said Dr Zahid.
Source: http://m.thedailynewnation.com