From ruin to revival

A year ago on this day the government confirmed the maiden positive case of the coronavirus disease in Bangladesh, roughly three months after its outbreak in China.

The biggest blow came on March 18 when the first person died from the illness linked to the deadly virus. As the cases spread rapidly, the government had to impose a strict lockdown.

It came about overnight and just upended everything. People's lifestyle changed. Livelihoods were disrupted. Schools, colleges and universities were shut, shops shuttered down and offices closed their doors.

Millions lost jobs due to the lockdown. Incomes for many fell as much as 95 per cent. The poverty rate doubled. Exports nosedived as developed countries put in place strict lockdowns.

Migrant workers came returning in droves as jobs abroad dried up, threatening to disrupt the flow of the cheapest source of foreign currency for the country.

There was internal reverse migration. The sharpest drop in incomes and higher food inflation became so unbearable that 10 million rickshaw pullers, day labourers, factory workers, housekeepers and others raced to get home before the start of the nationwide lockdown, wrote Asif Saleh, executive director of Brac, the world's largest NGO, in an article in April last year.

The densely populated country was staring at a humanitarian crisis because of its weak health system and a majority of its people's inability to stop working even for a few days.

Zahid Hussain, a former lead economist of the World Bank's Dhaka office, finds nothing in the country's 50 years of independence to come even close to the crisis.

"Bangladesh has not seen any widespread recession since famine-hit, war-torn 1974. I did not see another year when the impact has been so deep and wide, and that touched everybody," he said.

Apart from the poor, the new poor and the vulnerable, the middle-class has suffered. Their indebtedness has increased. Bangladesh does not have data on that. But people have borrowed from friends and relatives. They took money from loan sharks.

But thanks to the government's bold decision starting to ease restrictions from May, the economy breathed a sigh of relief. People continued to participate in the economy, albeit at a slow pace, defying the life-threatening virus.

"The government was able to assess the situation judiciously, so it partially reopened the economy, taking risks. It had no other option. We could not afford a lengthy lockdown," said Monzur Hossain, research director of the Bangladesh Institute of Development Studies (BIDS).

The reopening paid off.

Experts had warned of a surge in infections in the form of a second wave, as seen in other countries. Again, the apprehension did not materialise.  

There is a threat from new strains of the virus, and it is causing havoc in some countries. Bangladesh has so far remained unaffected.

There has been no significant spike in infections and death tolls despite two Eid festivals, social gatherings and even local elections. 

Migrant workers who chose to stay abroad, beat forecasts, sending home higher amounts of remittance month after month, ushering respite for their families as well as the ailing economy.

Bangladesh did not delay in securing coronavirus vaccines.

Within two months of the global rollout, it managed to avail the jabs and the ongoing vaccination programme is gearing up. This may bring the end to the crisis closer, much faster than it was initially thought with each passing day.

People's mobility has reached the pre-pandemic level in Bangladesh, according to a new Google report, although the coronavirus pandemic is still prevailing.

Bangladesh is the only country in the world that has shown positive growth in all the six indicators of a Covid-19 Community Mobility Report, which was published on March 2.

"I think 80 per cent of the economy has recovered from almost all sides," said Hossain of the BIDS.

The economy was not left unscathed, however.

Because of the devastating impacts of the pandemic, the government was compelled to lower the GDP growth projection for the current fiscal year to 7.4 per cent, down from 8.2 per cent set in June. The GDP grew by 5.24 per cent last fiscal year, against an aim of 8 per cent.

The pandemic was one of the reasons the government had sought to push back the graduation from the grouping of the least-developed countries by two years. Initially, Bangladesh was supposed to move out of the category by 2024 after comfortably meeting all of the three criteria.

Now the country has sought to graduate in 2026, and the United Nations Committee on Development Policy agreed last month.

Businesses in the manufacturing and services sectors witnessed closures, reduced operation, job losses and uncertainty. Many of these businesses are yet to fully recover, said Prof Selim Raihan, executive director of the South Asian Network on Economic Modeling.

"SMEs, in particular, have been the major victims. The export sector, one of the major drivers of the economy, is still in trouble. All these led to a large rise in the poverty rate in a short time," he said.

The government announced several stimulus packages for the affected sectors right from the onset of the crisis, which is praiseworthy. However, the effective implementation of the stimulus package remains a big question, he said.

"In particular, a large part of the affected SMEs remained outside of the government's support. SMEs, in particular, should be given the topmost importance," he said.

For social recovery, the social safety net coverage, including direct cash transfer and food assistance for the poor, should be widely expanded. Large loopholes in social protection programmes in the forms of leakage, corruption, wrong targeting and mismanagement should be addressed properly to ensure that the support reaches the poor.

Asif Ibrahim, vice-chairman of Newage Group, said the textile industry completely went off the track because of the pandemic.

"Previous structural weaknesses paired with the pandemic jolt have driven the textile industry into a corner and have created a 'do or die' situation," he said.

"The government incentive gives the industry access to cheap financing, but it is not enough to address the demand and supply chain disruptions over the long run," he added.

Monzur Hossain said activities of the businesses and factories that are not reliant on international markets have picked up significantly since the easing of the lockdown.

"Our survey found that micro, small and medium enterprises have recovered by 80 per cent by December. It is a good sign for the economy," he said.

The exports during the July-December period were almost at par with the pre-pandemic level, he said. "If we can retain the momentum, we may see a positive growth in the first quarter," he added.

Hossain said Bangladesh has major weaknesses in public health service. "The pandemic has created an opportunity for us to overhaul the public health system and make it user-friendly and efficient," he said.

Bangladesh is on its way to graduating to a developing nation, hence reforms should get more focus, he said.

"It will be difficult to sustain in the post-LDC era without foreign investment. We need to create new jobs and bring in new technologies. Otherwise, we will get into a trap," Monzur said.

The government needs to continue the stimulus packages to speed up the economic recovery, expand social safety net schemes for the poor, rein in inequality, and make improvements in areas of governance, he added.

The economy is expected to overcome the difficulties stemming from the fallouts of the Covid-19 pandemic in the third quarter of the current fiscal year on the back of rising exports, imports, and remittances, said the Metropolitan Chamber of Commerce and Industry, Dhaka, recently.

A large segment of informal industries, services and other activities have resumed operations but they seem to be running at a much lower level of capacity, the trade body said.

"Businesses, small and big, suffered in terms of revenue losses," said ASM Mainuddin Monem, a deputy managing director of Abdul Monem Group.

By June, the businesses might return to the pre-pandemic level, he said.

The real estate sector started seeing a revival from August, riding on the single-digit lending rate, cut in registration cost and scope to avail investments of undisclosed money without facing any questions from any government agency, said Alamgir Shamsul Alamin, president of the Real Estate & Housing Association of Bangladesh.

Emranul Huq, managing director of Dhaka Bank, said in the first three months after the lockdown, businesses came to a sudden halt. Profits of banks nosedived to a third.

Businesses put investments on hold, the implementation of many major projects were deferred and large industries pushed back their expansion plans.

Because of the lower-than-expected impacts of the pandemic, people's resilience and the government's immediate steps, the effects of the crisis seen during the March to June quarter diminished at least by half in the following quarter.

"The banking industry has now almost come to the pre-pandemic level. As people are taking coronavirus vaccines, things will start getting better for businesses after the first quarter, which will have a positive impact on the banking industry."

According to a study of the Centre for Policy Dialogue, only 44 per cent of factories were certain about orders in the six months to April.

If global growth roars, Bangladesh will not be left behind, said Zahid Hussain.

"Our exports will roar as well. If inflation in the western economies goes up, that will be good for us because we will get a good price, and buyers will not bargain much," he said.