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Name :MD.Moniruzzaman

ID : 17124024

Course Code : TE-121

Course Title :Bangladesh Studies

Department : Textile
Date :20-05-2020
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A Study on contemporary economic crisis in Bangladesh.

Economic Analyses of Contemporary Issues in Bangladesh is a collection of studies by economists and other
social scientists, working mostly on economic and social policies and issues in Bangladesh. This compilation
of analytically well-grounded studies by established researchers covers a variety of topics such as economic
growth patterns, regional convergence of per-capita income, micro-credits, natural resource management,
household choice of water and sanitation facilities, capital markets, exchange rate policy, corruption, and
transfer pricing by foreign investors. The authors have applied different analytical techniques and
methodologies and have drawn conclusions and policy implications based on empirical findings. The volume
reveals that Bangladesh has had significant regional convergence in economic growth, with both financial
development and human capital formation contributing to that growth, and that the economic development
accompanying this growth has resulted in a reduction in the nation's fertility rate. Financial development was
also a factor in de-linking currency devaluation from inflation. However, the pace of regional convergence
started to slow down in the early 1980s. Foreign capital inflow is poor because of governance problems and a
weak stock market. If foreign investment is invited, careful attention should be given to the regulatory regime
and policies such as transfer pricing. A number of the articles explore the possibility of employment generation
and income redistribution through fisheries management and micro-credit as well as the issue of proper
sanitation. This volume is written for both the students and teachers of economics and related disciplines,
such as business, finance and development studies. Also, as an independent, balanced and homegrown
source of information, it would be useful to both policymakers and other practitioners dealing with the
contemporary issues in Bangladesh.

“Bangladesh will face an economic shock by declining export and tourism revenue in a large-scale due to restricted
export policies and travel bans”.

F ew weeks ago, people of Bangladesh were living peacefully, travelling freely, doing their jobs perfectly; the
economic growth projections were cheery and the financial market were tolerable – as the world recovered
from the global financial crisis of 2007-09. But the novel coronavirus or Covid-19 has brought a dramatic
slowdown in the overall life style and economy of the world where Bangladesh became a victim too. The
exponential spread of the virus and its deadly effect made it clear that it has the potential to wreck the
economy. Initially, economist thought the recession was “Vshaped”, where a sharp decline is followed by a
sharp rise back to its previous peak, as it was a Chinese problem and the country was dealing with it
persuasively so the economy will be in full-power after a small shock. As time went by, the economic impact
of Covid-19 has proved to be costlier than expected. Though the world has faced several pandemics in the
21st century such as Severe Acute Respiratory Syndrome (SARS) in 2002, N1H1 (Bird flu) in 2009, Middle East
Respiratory Syndrome (MERS) in 2012 and Ebola in 2013-14, the novel coronavirus or Covid-19 is different
due to its exponential growth and attacking powers. Since the attack of this virus in Bangladesh is a very
recently identified case with very low scale, questions may arise whether this will affect us economically. The
answer is very simple. When giant economies like US, China, Japan, Germany, Britain, France, and Italy are
affected, the rest of the world will not be spared from the blow as these economies carry almost 60% of
world supply and demand in terms of GDP, 65% of world manufacturing and 41% of manufacturing exports,
as per a report of the World Trade Organization published in 2020. Global economy is connected through
cross-border flows of good, services, people, know-how, financial capital, foreign direct investment,
exchange rates and international banking. As a consequence, Bangladesh will experience a slow growth in its
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economy as the USA, UK and Germany are the main importers of its products specially clothing and leather
products and China is among the main investors for mega development projects. Thus, this virus will bring
economic shocks. Tangible economic shocks can be categorised into two: firstly, purely medical shocks – as
the affected persons cannot contribute to GDP and secondly, the economic impact of public and private
containment measures – things like school, office and factory closures, travel restrictions, and quarantines.
Hence, Bangladesh will face an economic shock by declining export and tourism revenue in a large-scale due
to restricted export policies and travel bans. For example, the Asian Development Bank (ADB) (2020)
predicts that in hypothetical worst case scenario (no tourism receipts and sharp decline in domestic demand
in China for six months plus the outbreak in other Asian economies lasting three months), Bangladesh will
lose approximately $3 billion in its GDP (1.10 per cent decline) and there will be job cuts for around 9 million
people

Specifically, in the sectoral scenarios, the highest GDP loss and job cuts will be in business sector including
financial sector, trade and public services by $ 1.14 billion and 2,01,106 people respectively followed by
agriculture ($637 million, 4,58,000 people), tourism ($510 million, 50,000 people), construction and utilities
($ 400 million, 1.18 million people) and transport service ($334 million, 67,000 people). So, the statistics
shows the predicted lethal impact of Covid-19 on Bangladesh economy. But the question is how the virus
can slow down the economy of Bangladesh? There are mainly three reasons that can hinder the economic
activities in Bangladesh such as, direct impact on production, supply chain and market disruption as well as
impact on firms and financial markets. Financial sector, specifically the banking sector in Bangladesh, can be
the most affected sector. This is because banks were the heart of all crises such as sovereign euro crisis and
the global financial crisis. If banks fail, the Small and Medium Enterprises (SMEs) will be more affected.
Strategical measures can win over any situation. So, in order to surmount this panic and deadly situation, the
government and policy-makers of the country and the Bangladesh Bank have to come forward to minimise
the economic losses and panic by considering both shortrun and long-run policies as the size and diligence of
the economic damage will depend on how government handles this sudden pandemic. The government and
policymakers should be very careful to send a message of cohesion, accountability and leadership to prevent
fear and panic. In this regards, government can learn from Singapore’s effective handling of the issue since
The Chinese New Year. Though the government has fixed the price of necessary hygiene related items
including hand sanitiser and face masks, however proper enforcement of this decision is a must. The World
Health Organization (WHO) already declared the virus as pandemic so the government should shut down
educational institutions and reduce largescale social interaction like meetings, conferences, seminars,
symposiums immediately. Bangladesh government and the central bank must make sure that interrupted
economies continue to function amid the virus outbreak. In this regard, government should instruct the
financial and non-financial institutions, educational institutions, and all government and non-government
institutions need to set up cloud-based work at home facilities so that they can continue their smooth
operation during such occurrences. While cutting interest rates is a possible response for Bangladesh bank,
the shock is not simply a demand management problem but a multi-faceted crisis that will require monetary,
fiscal and health policy responses. The increased government spending should be first directed to the health
sector for supporting all essential expenditure on prevention, containment and mitigation of the virus,
including higher overtime pay and better working environment conditions (specially the health care
personnel who are involved in taking care of those infected), as well as research. To stimulate the motivation
of those health care personnel and considering the safety of the people, the government should declare a
health insurance policy. Supporting vulnerable households and firms is essential as containment measures
and the fear of infection can cause sudden stops in economic activity. The increasing liquidity buffers to firms
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in affected sectors is also necessary to avoid debt default. In addition, reducing fixed charges and taxes and
credit forbearance would also help to ease the pressure on firms facing an abrupt falloff in demand. Finally,
the government, oppositions, the NGOs, the other social organisations, the business people, the financial
and non-financial institutions, and the people of Bangladesh should come forward and work together to
handle this pandemic and minimise both the economic and non-economic losses.

COVID-19 epidemic evolution

To find out about the latest status of the COVID19 pandemic evolution and the most
up-to-date statistics on the COVID19 disease in Bangladesh, please visit
the Bangladeshi government platform with the official data. Official information on
the progress of the epidemic in Bangladesh is consolidated by the Directorate
General of Health Services. The agency provides a daily epidemiological update,
which includes key national figures.
For the international outlook you can consult the latest situation reports published by
the World Health Organisation as well as the global daily statistics on the coronavirus
pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures
To find out about the latest public health situation in Bangladesh and the current
sanitary measures in vigour, please consult the Bangladeshi Directorate General of
Health Services (the website is in Bengali, but the publications are in English)
including the up-to-date information on the containment measures put in place and
public health recommendations.
Travel restrictions
For the information on the travel restrictions undertaken by the government of
Bangladesh, please consult the Banglsdeshi government platform on COVID-19.
For the international outlook you can consult the latest travel updates available on
the IATA website.

Import & export restrictions

For the information on all the measures applicable to movement of goods during the
period of sanitary emergency due to the COVID-19 outbreak (including eventual
restrictions on imports and exports, if applicable), please consult the portal of the
the Bangladeshi Customs.
For a general overview of trade restrictions due to COVID-19 pandemic, please
consult the section dedicated to Bangladesh on the International Trade Centre's
COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the information on the economic recovery scheme put in place by the
Bangladeshi government to address the impact of the COVID19 pandemic on the
Banagladeshi economy, please visit the website of the Bangladeshi Ministry of
Finance. The information on the Bangladesh economic emergency plan is
available here.
For the general overview of the key economic policy responses to the COVID-19
outbreak (fiscal, monetary and  macroeconomic) taken by the Bangladeshi
government to limit the socio-economic impact of the COVID-19 pandemic,  please
consult the section dedicated to Bangladesh in the IMF’s Policy Tracker platform.

Support plan for businesses

For the information on the local business support scheme established by the
Bangladeshi government to help small and  medium-sized companies to deal with
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the economic impacts of the COVID19 epidemic on their activity, please consult  the
portal of the Bangladeshi Ministry of Finance and the Central Bank of Bangladesh.
For a general overview of international SME support policy responses to the COVID-
19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to
COVID-19.

Support plan for exporters

To find out about the support plan for exporters put in place by the Bangladeshi
government, please consult the latest publications available on the Bangladeshi
Export Promotion Bureau website.