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A Glance

Of Post Pandemic Economy

Of Post Pandemic Economy
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This corona crisis is an absolute win-win situation for black money holders while the post pandemic world will see a high crime rate. Because governments around the world will not judge the source of income to boost up foreign and local investment. Black

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Md. Mahmud Hasan :
The Coronavirus pandemic has thrown the entire world into an age of uncertainty unseen in living memory --- Aysu Bicer (Anadolu Agency)
When the pandemic situation is about out of control in most of the countries, the economic organizations around the world are trying to show us the practical fear of the post pandemic economies. Even though every economy will suffer from this pandemic's claws, the emerging economies such as Bangladesh, India, Turkey, Mexico, and Vietnam will be the worst sufferer.
David Lunhnow at Wall Street Journal wrote that China's and India's economy will continue to grow robustly. But he must've forgotten that China and India are not same. China's economy is more diversified than India's. Moreover, India's economy is a thriving one which is largely dependent on remittance. It saw only 4.5% GDP growth rate last year and it will thrive more because of the lack of remittance flow just like Bangladesh after this pandemic. Again, political and religion clashes are so frequent in India which is believed to be the prime reason of economy's bad days before Corona hit. It started from Kashmir problem and after then now on.
Corona crisis will cause a long-term GDP growth issue because banks will see a liquidity crisis from both sides. Governments around the world are taking loans and remittance flow will at lower level. Remittance flow is very important for countries like Bangladesh and India. In case of Bangladesh, in 2019 more than $18 billion came in Bangladesh which 5.6% current GDP. Now because of this pandemic Bangladesh and India are going to face an extensive wave of remittance fighters coming back home while India is already at Tweet war with Arabian countries. According to BBC, more than 5,50,000 immigrants had returned to Bangladesh as per 12 March, 2020. This number rose to nearly 7,00,000 by the end of March before complete air lockdown.
Because of this liquidity crisis it will be hard for giving or receiving loans for banks and entrepreneurs respectively. Number of investments will be decreased because of the freezing phenomena of credit market. Investment flow will see a tremendous change in terms of sectors. Investors will invest more in medical and other public health services in developed countries which will indirectly effect investments on developing countries. This will cause a serious dry pipe of investment in developing countries. This will hamper GDP growth rate all around the world. World Bank has already announced that Bangladesh's GDP growth rate will be between 2%-3% in this fiscal year.In India this rate may come down to 1.5%-2.8% in FY-21. According to Forbes this rate may come down to only 1%.
While talking about developing countries even in USA the Federal Bank of St. Louis estimated that by the middle of this year, the US unemployment rate could hit 32.1% which will surpass the previous highest in 1993. Already more than 16.8 million people have lost their jobs in USA while United Nation Labor Organization estimates that nearly 195 million full time jobs could be lost because of this corona pandemic.
Now developed countries as well as developing countries also announced a huge number of relief package to mainly to save their medium & small industries. Emerging economies such as Bangladesh announced $8.5 billion, India $23 billion and Turkey $15.4 billion which are their GDP's 2.52%, 2.05% and 0.72% respectively. It won't actually differ by emerging economies that how much portion of their GDP they are allotted for relief packages. But it will absolutely differ that how much of that announced amount is spent in those industries where they're really needed to be spent. The governments must ensure the proper allocation otherwise they are going to face what they are most feared of, an economic dearth. Mariana Marzacotto, a professor of economy & director of UCL at IIPP wrote about this on Project Syndicate, 'After the 2008 financial crisis, we learned the hard way what happens when governments flood the economy with unconditional liquidity rather than laying the foundation for a sustainable and inclusive recovery. Now that an even more severe crisis is underway, we must not repeat the same mistake.'
Why she said so? Because in 2008 policy makers flooded the world with liquidity without directing it toward good investment opportunities. As a result, that money ended up back in a financial sector that was until for purpose.
Another dimension of problem for emerging economies is running newly built huge infrastructures and completing undergoing mega projects just like the problem Russia faced after getting birth. This will lead countries for international debt. Bangladesh is already seeking $700 million loan from IMF. In Africa the whole continent needs approximately $100 billion financial support. Some of low incoming countries are already diving into the sea of debt. For these countries the World Bank and IMF have made an urgent call to relief their debts bilaterally so that they can get fiscal space to respond the pandemic.
This corona crisis is an absolute win-win situation for black money holders while the post pandemic world will see a high crime rate. Because governments around the world will not judge the source of income to boost up foreign and local investment. Black money holders will come out of their carapace and will start investing. Black-money holders of developing countries will not invest in their countries. They'll invest in developed countries to get PR/Citizenship. By this process developed countries will recover their economy in a very short time.
The upcoming economic crisis will be greater the 1930's great depression. Countries like Bangladesh and Vietnam haven't even felt the heat of 2008's financial crisis much because of the continuous production of RMG sector. But this time we are going to feel the heat first. So, we must be very well equipment with whatever we've got.
(Md. Mahmud Hasan, student of department Of Criminology, University of Dhaka; email: mahmud101810@gmail.com)

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