Remittance was cruising; COVID-19 popped up and made it swerve
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When China sneezes, the world catches a cold, it is often said.
And Bangladesh, which includes up to now been immune from the China-originating coronavirus that's tearing through the world since January, has began to feel the cold: remittance, one of the lifelines for the economy, has started to feel the twitch.
Of the very best 30 remittance sending countries, inflows from 19 have contracted in the first 8 weeks of the entire year, according to data from the central bank.
In January, remittance inflows stood at $1.63 billion, down 3.14 % from per month earlier. The figure also decreased 11.36 % to $1.45 billion in February.
And in the days ahead, it will fall off even more, given the actual fact that the virus is bringing the global economy down to its knees, authorities said.
Although Covid-19 has now spread over to Europe and America, the Gulf countries, which play host to a large population of Bangladesh's migrant workers, are facing economical setback too because of lower demand of petroleum, said Ahsan H Mansur, executive director of the Policy Research Institute.
"This implies, remittance from the center East may also decline, that will hit the rural economy," he added.
Remittance from Saudi Arabia and the UAE, the very best two resources of remittance for Bangladesh, decreased in January and February.
Non-resident Bangladeshis in Saudi Arabia sent home $321 million and $308 million in January and February respectively. In December last year, they remitted $335.73 million.
The UAE also showed the same worrisome trend: $213 million in January and $192 million in February came from that country, as opposed to $235 million in December.
Remittance from Japan, that was also struck by the lethal virus, also registered a declining figure $3.04 million came in February and $3.92 million in January, down from $5.53 million in December last year.
Italy, one major remittance source for Bangladesh and happens to be on lockdown, submitted frustrating sums in the last two months.
Remittance from the European country stood at $57 million in February, $73 million in January, however the figure was $83 million in December.
The government started to provide 2 per cent cash subsidy for remitters out of this fiscal year to give a boost to remittance with a view to tackling the forex crisis.
Subsequently, remittance hit an all-time high of $18.32 billion this past year riding on the incentive.
But Mansur said the 2 2 % cash subsidy will not work now as the host countries are now staring at significant monetary slowdown for the coronavirus pandemic.
The countries damaged by the virus will have to take a very long time to regenerate their economy after getting rid of the virus, he said.
"The rural economy will be hit hard by the global financial crisis as the spending capacity of a large number of villagers rely upon remittance," said Mansur, also a former official of the International Monetary Fund.
He, however, said Bangladesh will not face a major crisis in managing its balance of payments as the price of oil is decreasing because of the sluggish global economy.
But the Bangladeshi employees of the center East may lose their jobs as the Gulf economies are largely reliant on their petroleum exports, said Mansur, a former economist of the International Monetary Fund.
Those that send home money between the Bangladeshi diaspora are mostly engaged with small businesses such as junk food shops and grocery stores, said Zahid Hussain, a former lead economist of the World Bank's Dhaka office.
"But a large number of men and women in those nations have already been quarantined, so smaller businesses there have been shut. So, their income sources have already been affected."
Many large companies are also forced to suspend production, forcing the employees to leave their job, he said.
"Against the background, remittance will decrease more in the coming days."
Many countries have previously imposed restrictions on international travel, putting a detrimental impact on global the economy.
"We have no idea when the problem will stabilise. So, the united states doesn't have any substitute for push up remittance at this time."
Given the rainy days, the non-resident Bangladeshis are keeping their hard-earned money.
"They don't be remitting their funds back to Bangladesh as they would need the sums because of their own survival," Hussain added.
A great number of non-resident Bangladeshis have already been compelled to return with their home country as a result of the outbreak, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.
"Remittance, which is the only 1 positive indicator inside our economy, has now started to feel the pinch. That is highly frustrating."
The situation gets worse in the coming days, but there is no remedy now to tackle the state of affairs, said Rahman, also the immediate past chairman of the Association of Bankers, Bangladesh, a forum of managing directors of banks.
The lower remittance won't hit the banking sector immediately given the declining trend of import, he said, adding that problem will be created once imports pick up.
The government should improve the 2 percent cash incentive on a short-term basis to help the remittance receivers, said Md Arfan Ali, managing director of Bank Asia.
According to Bangladesh's Wage Earners' Welfare Board, there are several 1.20 crore Bangladeshis working across the globe.
Source: https://www.thedailystar.net
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