Financial Impact Of The Pandemic On Bangladesh Economy (Short Write-up/Summary/Composition)

Short Write-Up (Within 200 Words) On ''Financial Impact Of The Pandemic On Bangladesh Economy''

Covid-9 has affected the global economy in a negative manner. The pandemic is having an adverse impact on Bangladesh's economy by affecting millions of people's life and hampering  heir income sources. The outbreak of COVID-19 has created more pressure on the laboir market. The pandemic reduces employment opportunities as most of the companies have stopped their recruitment process to cut their operational costs which increases the rate of graduate unemployment in Bangladesh. Prime reasons for graduate unemployment are low demand and huge supply of graduates in the labour market, lack of professional skills of graduates, ineffective education system etc. The government of Bangladesh should develop some policies to overcome this problem such as ensuring employment subsidies, implementing skills development programs, improving labour market flexibility, initiating credit programs for generating employment and developing entrepreneurial ecosystems in Bangladesh.

It affected the major economic and financial indicators of the economy of Bangladesh including production, wages, price levels, advances, bills, investments, remittances and foreign trade. In addition to the recent impact of the global economic meltdown, Bangladesh also experienced severe demand contraction in the local economy, this exacerbated the overall economic crisis of the country. Both domestic and international demands declined due to the outbreak and subsequent lockdown so producers responded by lowering output to minimize the loss, especially in the manufacturing sectors. Nominal Wage Rate Index in the industry and service sectors fell in recent times, which now appear to be recovering. The national inflation rate has not been affected much based on point-to-point changes. Food inflation fell in May 2020 but it appears to have risen recently. Non-food inflation rates have been falling over the last six months from April-September 2020. Prudent measures should include constant monitoring and adapting to the latest developments in major trading partners and host countries to mitigate the economic losses caused. Bank credit would play a key role in the ongoing and upcoming recovery process, as the government has opted for a credit-led stimulus package. It would take time for Bangladesh to return to it's normal financial condition.

Write a summary on "How COVID-19 has impacted the Bangladesh economy"

We all know the world has got affected worst due to COVID-19 crisis. The economy has shrunk rapidly and unemployment has touched a sky high and other side inflation has touched a bottom. The all major economic activities like, manufacturing, construction, retail, trading mining etc have got affected worst. The major affected industry are- retail, trading, aviation, tourism, hospitality etc. Due to COVID-19 the the economic activities have Bangladesh got affected. Export has declined, In fact, exports in April and May 2020 were only 29% of the same two months in 2019. Our estimate is that exports for the remainder of 2020 will reach 55-60% of the 2019 level for the seven months of June-December. Due to crisis in Gulf countries remittance has declined rapidly. Remittances for the same period were 82% of the value in 2019. Other side unemployment rate have increased rapidly. The major area of Bangladeshi economy are unorganized and When COVID-19 hit Bangladeshi economy, most of the workers in the small establishments lost their jobs or found that the enterprise in which they worked had difficulty functioning. IF you talk about the foreign capital inflow, it has declined but not more. For the first 10 months of 2020, the Financial Account of the Balance of Payments shows an inflow of $4.7billion or 92% of the same period in 2019. But it is not satisfactory and will decline for 2020-21 further.

The government’s analysis as presented in the budget documents indicates the economy is expected to fully recover in 2020-21 returning to a high growth rate. The expected growth is 7.5% that is highly optimistic GDP forecast but it is expected that the economy will grow with a good growth rate. The government and the central bank have adopted an expansionary monetary policy. The government’s brilliant programs to distribute cash through the payment of export workers’ salaries (The Tk5,000 crore program) and the distribution of Tk2,500 to 5 million poor persons both directly contributed. Other side the central bank have also taken required actions to support the economic growth. This belief is also manifest in the actions of the central bank in establishing rules for its credit lines. BB seems to believe the banks will draw heavily on the working capital lines, responding to the growth in demand. Stronger governance by BB ceasing the excessive forbearance now allowed; adjusting the interest rate regulations to increase flexibility; removing much of the bad debt from the banks and freeing them to concentrate on the future. The government is also working on increasing revenue and but its not satisfactory. Other side the government is need of work on export promotion also.

Short Composition On ''Financial Impact Of The Pandemic On Bangladesh Economy''

Introduction –

The lockdown caused by Covid-19 Pandemic has resulted in economic recession all over the world. It has hard hit the economy of bangladesh also. Pandemic has impacted various economic sectors in bangladesh. It has affected both formal and informal sectors.This outbreak has severly affected the aviation industry in bagladesh.

Present outlook of Bangladesh economy –

We offer a comprehensive picture of the rural economy in Bangladesh during the first three months of the lockdown period in comparison with the pre-COVID-19 situation. Using a nationally representative sample (of 2,312 rural households from 62 villages in 56 districts) known as the Mahbub Hossain Survey sample, we conducted a telephone survey in June 2020. Our descriptive and regression analyses suggest that, during the survey period, the rural economy experienced several adverse impacts from the containment measures, such as a delayed harvest, difficulty in selling farm produce, labor and material input disruptions and cost increases, and reductions in remittance receipts and non-farm business sales. Rural households had to reduce their food consumption and receive food support from the government and cash support from the private sector. Vulnerability was especially apparent in households with a head who was female, less educated, young, or casual labor. Livelihoods varied significantly among geographic areas according to the concentration of the infection and less significantly according to the stringency of the lockdown measures. We also found that rural households preferred cash or product support, rural work or employment support, and cash assistance or soft loans for farm inputs and business inputs at the time of the survey.

The economic impact has been felt in three main avenues: first, a drop in domestic economic activity, after the shutdown announced on March 26 (now gradually being lifted); the second is a decline in exports of ready-made garments, which represent more than 80 percent of Bangladesh’s exports and have been strongly impacted (overall exports fell by 83 percent year-on-year in April). Finally, there has been a fall in remittances from Bangladeshis living mostly in Middle Eastern countries, affected not just by the pandemic but also by the decline in oil prices.

Bangladesh is one of the most densely populated countries in the world, and this is a huge challenge when you are trying to contain the impact of a pandemic like COVID-19. Another challenge is limited health infrastructure. The capacity of the health system is really being put to the test, and requires considerable support from development partners. It is estimated that the country needs about $250 million for clinical equipment, testing, and contact tracing, just to respond to the initial impact. This amount will need to be mobilized with external support.

Impact on rural economy –

Due to pandemic airlines are in severe financial pressure. Many other sectors such as readymade garments, tourism and hospitality are dependent upon aviation industry. Lockdown has resulted in extreme drop in number of flights. Due to this local airlines in bangladesh are facing loss. They have cut down their flights on International routes and in domestic routes. The number of travellers decreased. So airline industry is trying to reduce their charges. It has put pressure in the job market.

Since March, several stimulus measures were deployed to sustain economic activity and protect the most vulnerable. There is a package of about $600 million to support the wages of workers in the ready-made garment sector, provided in the form of subsidized loans to companies so that they can pay wages for three months. This is very important because the ready-made garment sector is responsible for much of the recent progress in incorporating women into formal economic activity.

Additionally, takas totaling about $150 million will be provided as cash assistance to about five million families displaced by the pandemic. There are also measures to protect the homeless and for food distribution. Cash allowances for the elderly, widows, and disabled individuals are also being expanded.

Impact on urban economy –

According to an estimation of International Air Transport Assosciation (IATA), this outbreak can cause 11000 job loss in Bangladesh in aviation sector.

Aviation sector supports more than 1 lakh jobs in bangladesh and was expecting 1lakh 40 thousand more jobs by 2038 but this Pandemic has caused 9% of job loss in the sector.

Biman Bangladesh airlines has cut off the salaries oof their staff members by 10% and has cancelled other benefits like overtime which has affected more than 5000 people working in aviation industry.
Before the outbreak of Covid19, the airline industry was contributing 0.3% to the GDP but travel restrictions has made most of the International airline services impossible and the global network has shrinked.

The Pandemic effect –

Since March, several stimulus measures were deployed to sustain economic activity and protect the most vulnerable. There is a package of about $600 million to support the wages of workers in the ready-made garment sector, provided in the form of subsidized loans to companies so that they can pay wages for three months. This is very important because the ready-made garment sector is responsible for much of the recent progress in incorporating women into formal economic activity.

Additionally, takas totaling about $150 million will be provided as cash assistance to about five million families displaced by the pandemic. There are also measures to protect the homeless and for food distribution. Cash allowances for the elderly, widows, and disabled individuals are also being expanded.

Conclusion –

We all know the world has got affected worst due to COVID-19 crisis. The economy has shrunk rapidly and unemployment has touched a sky high and other side inflation has touched a bottom. The all major economic activities like, manufacturing, construction, retail, trading mining etc. have got affected worst.

The government’s analysis as presented in the budget documents indicates the economy is expected to fully recover in 2020-21 returning to a high growth rate. The expected growth is 7.5% that is highly optimistic GDP forecast but it is expected that the economy will grow with a good growth rate. The government and the central bank have adopted an expansionary monetary policy. The government’s brilliant programs to distribute cash through the payment of export workers’ salaries (The Tk5,000 crore program) and the distribution of Tk2,500 to 5 million poor persons both directly contributed. Other side the central bank have also taken required actions to support the economic growth.

Finally we can Say, the government is working on increasing revenue and but its not satisfactory. So people from all around Bangladesh should come forward to solve this global pandemic crisis.