Coronavirus pandemic is not a crisis limited to any country, it is a global crisis. It has infected over 3 million people worldwide. Bangladesh has over 6500 confirmed Coronavirus cases and 160 deaths as of 30th April 2020.
In a report by the Asian Development Bank (ADB), the Gross Domestic Product (GDP) of Bangladesh may contract by 1.1% wiping out over $3 billion from its economy.
Remittance inflow from the Bangladeshi overseas workers is one of the most important sources of Bangladesh’s economy, contributing about 5.6% to the country’s total GDP. An estimated 7.5 million Bangladeshis are immigrants around the world and 2.8 million live in the Middle East, according to the World Bank.
In addition to the Gulf Countries, Southeast Asian countries, primarily; Malaysia and Singapore are popular destinations for Bangladeshi overseas workers.
The economic downfall due to the lockdowns and travel restrictions to contain the virus and a sharp decline in oil prices has severely impacted the overseas workers’ income. The sharp decline in oil prices has been induced by reduced demand and the oil price war between Russia and Saudi Arabia.
In a recent report, World Bank has predicted a 22% decline in remittances to South Asia for 2020. In March, Bangladeshi overseas workers sent home around $1.29 billion dropped from $1.46 billion in March last year which is the lowest in 15 months and 12.84 percent less compared to the preceding month, according to Bangladesh Bank data. The decline is likely going to drop further due to the prolonged recession in host countries.
If you are under lockdown and would like to send money back to Bangladesh without stepping out from your homes, send money online with zero risks.
Shock in exports
The country's export earnings largely depend on the readymade garment (RMG) industry which constitutes around 84 % of the country’s export revenue.
According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), export orders worth about $3 billion have received order cancellation or shipment delay notices from the buyers. And over 1 million workers have been laid off or furloughed.
Moody’s, an international credit agency forecast a recovery for the RMG sector by the end of the year for Bangladesh, as demand recovers and supply chain shocks are overcome.
Bangladesh's apparel industry employs more than 4 million people in the country with 164 million total population and constitutes about 13 percent of the GDP of the country. These layoffs are likely to increase as long as the COVID-19 pandemic is prolonged.
Measures on Banking System
The Central Bank of Bangladesh has been trying to inject liquidity into the economy. Bangladesh Bank started buying dollars from commercial banks to curb Bangladeshi Taka’s appreciation against the dollar. This provides the instructions on provisions for rescheduled loans and banks to extend tenure to realize export proceeds while allowing importers time to make import payments.
The Ministry of Finance directive and banks were to come to terms with 6% and 9% caps to interest rates on deposits and loans, vulnerable asset quality, capital markets, and the severely impacted micro finance sector.
Measures in the Healthcare System
In early April, the World Bank approved a $100 million financing to help Bangladesh fight the COVID-19 pandemic. It's financed by the International Development Association (IDA), the World Bank’s fund for the poorest countries. COVID-19 Emergency Response and Pandemic Preparedness Project will work in the whole nation to strengthen its national systems for public health emergencies. It will upgrade selected health facilities and laboratories for confirmed cases of COVID-19 and also support screening of Bangladesh’s designated health facilities and entry points.
The Bangladesh Bureau of Statistics indicates that Bangladesh has more than 50 million workers in the informal sector, a section most vulnerable to poverty and hunger.
The silver lining is that the Vulnerable Group Feeding (VGF) Program will step in to provide food aid for these vulnerable households. VGF program was launched in the wake of the famine in 1974 by the Government of Bangladesh in partnership with the World Food Programme (WFP).
Till today, VGF continues to be a humanitarian program that provides food aid to the vulnerable sections of the society during disasters and major religious festivals. Recently, the government increased its budget for VGF to expands its public food distribution.
Path to recovery
The Bangladesh government has taken up timely measures by announcing a multi-sectoral stimulus package that is backing the RMG industry, providing direct incentives to workers, supporting the banking system, and ensuring liquidity in the economy.
Bangladesh has a low rate of COVID-19 cases within the country. However, recovery of Bangladesh's economy is largely dependent on the recovery of its overseas worker’s health and earning which is dependent on the economic and public health status of its trading partners and host countries.