Economy with deep scars limps along

Business and industrial activities resumed yesterday amid a semblance of normalcy after a spasm of violence, internet outage and a curfew that left deep wounds in almost all corners of the economy.

Violent clashes, stemming from the quota reform demonstrations, shuttered garment factories and shops and choked port activities when the country was grappling with the toughest economic challenges in decades: high inflation, falling exports and a persistent dollar crisis.

Economists predict that the impact of the widespread unrest and internet blackouts will be much greater than the fallout of the Covid-19 pandemic. By one estimate, the economy bled out about $1 billion a day for a stretch of five brutal days that saw deaths and destructions on a scale never before seen in independent Bangladesh.

Amid economic gloom, garment factories restarted production yesterday to meet the tight deadline for delivery. Shipments of export containers and delivery of imported items gained pace, and trucks began to roll as the broadband internet was restored.

However, factories faced a scarcity of raw materials due to supply chain disruptions, according to Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association.

"Had the government given importance to resolving the quota issue through dialogues, the situation would not be so dire," he added.

Banks reopened their gates to provide services to customers, who lined up for cash withdrawal, encashment of inward remittances and payment of utility bills after a three-day general holiday announced in the wake of the unrest.

Despite the pressure, most banks were able to provide services by and large, said Selim RF Hussain, chairman of the Association of Bankers Bangladesh.

The moribund stock market nervously resumed trade at 11:00am yesterday, but the key index of Dhaka Stock Exchange sank 1.76 percent, the steepest decline in almost two years.

Retail shops in Dhaka, the main hub of trade, reopened but salespeople were disappointed by the thin presence of customers.

Alam Sheikh, a salesman at a clothing store at Nurjahan Supermarket, opposite to Dhaka College, was one of them.

"Customers seems to be afraid of the risk of violence," he said.

Between 10:30am and 1:30pm, Alam Sheikh's sales stood at Tk 3,000, a third of his sales revenue on a regular business day.

All these bleak data point to Bangladesh's plunge into an economic stasis, however short-lived. Save for agricultural activity, trade, manufacturing and all other economic activities were almost suspended for a week.

In the months to come, consumer prices may go further up. New investments will be on hold and jobs will evaporate. Bangladesh also runs the risk of losing export orders and many companies will struggle to pay their employees on time.

"This is a huge loss for Bangladesh when the country is already facing an economic crisis. The latest unrest has a significant impact on the economy," said Ahsan H Mansur, executive director of the Policy Research Institute, sharing his estimate that the country lost around $1 billion a day over the last few days.

"Supply chain disruptions will fuel inflation, which is already high," he said.

His grim prediction has a basis as annual inflation rose to 9.73 percent in fiscal 2023-24, the highest in 12 years, overshooting the government's target of containing it to 7.5 percent.

Ahsan Mansur, a former economist at the International Monetary Fund, warned that export orders might be diverted to other countries in the wake of the recent crisis in Bangladesh.

Zahid Hussain, another noted economist, described the crisis as the nation's double jeopardy: a real-life lockdown and a virtual lockdown.

"Its impact will be more severe than the Covid-19 pandemic, as people could run businesses at the time. During the pandemic, online payments were unhindered. But this week, everything was closed due to internet outage," he said.

The unrest killed at least 154 people, according to The Daily Star's count based solely on hospital sources, although it could be higher as this newspaper could not reach all the hospitals where many critically injured patients were taken for treatment. Also, many friends and families reportedly collected the bodies of their loved-ones from the scenes, and this newspaper could not contact them. Additionally, many hospitals did not even record the deaths, and asked the relatives to take them away.

All these will hit the confidence of foreign buyers and dent the image of the country which registered about 6 percent GDP growth over the last one and a half decades thanks to the political calm, Hussain said.

"The internet blackout was suicidal for the economy. How deep the injury is and how long it will stay remains to be seen," he said. "But we cannot count the loss of lives, which is countless."

With additional reporting from Sukanta Halder