Covid-19 Pandemic A new history of our time31 October 2021
Dr. Md. Shamsul Arefin :
The economic shock due to the COVID-19 pandemic for near about two years has shown us a different outlook and taught us diverse ways of financial tremors, income and economic threats. No doubts that the next generation of the world will remember our sufferings for a long time. These sufferings, new experiences sometimes sweet and sometimes sour. A clear move from U.S.-centric globalization to a China-centric globalization has created more opportunities for economies of Asian countries. Now import and export for Bangladesh has got new momentum. China, Bangladesh and India supplementing and complementing each other's export and import. What India exports, Bangladesh does not, What China exports, Bangladesh in most cases does not exports. So, these are not competing economy rather supplementing each other's economy by importing export led raw materials. But at the same time, Pandemic has shown us negative sides such as new job opportunities are still very low in many Asian countries including Bangladesh. The central banks in many countries, including the UK, Bangladesh, have slashed interest rates just to make borrowing cheaper and encourage investment to boost the economy. Retired and low-income earners who mostly live on the profit of fixed deposits have been facing serious financial crisis because of low rate of bank interest on their deposits. The IMF estimates that the global economy shrunk by 4.4% in 2020. They described the decline as the worst since the Great Depression of the 1930s.
The travel and tourism industry has been badly damaged. Airline industries have lost their running capital. Billions of dollars have been lost in 2020 -2021 and although the forecast for 2nd half of 2021 is better, many analysts believe that international travel and tourism won't return to the normal pre-pandemic levels until around 2023. A number of pharmaceutical companies such as Johnson& Johnson and Sanofi/GSK have been starting production of vaccine along with Pfizer, AstraZeneca. The UK's furlough scheme, which is designed to keep workers in a job amid the government lockdown, is expected to limit the rise in unemployment to 4.8% in 2021, from 3.8% last year. The Bangladesh Bank has slashed interest rates to a new low and freed up huge amount for commercial banks to lend.
The International Labor Organization (ILO) has been looking and measuring the loss of labors in the world job market due to pandemic. ILO said that workers and businesses have faced catastrophe, in both developed and developing economies. Now economies should be moving fast for its survival and prohibiting further collapse.
It is true that the pandemic has opened opportunities to discover the pleasure of spending time with family, dedicating time to reading, listening to music, painting etc. In this sense, lockdown became an opportunity for self-disclosure and development of personal relation. Young had time to think about himself much more to make him a better and acceptable person, discovering what confuses him and understanding who he is. Children got chance to spent more time with parents.
The businesspeople have been trying hard to bring back their businesses, trades, commerce, jobs but economy did not stand on its own footings. What measures can be taken to open a window for creating new jobs and to expunge the sufferings of the people is the cornerstone discussion by policy level now. The pandemic due to coronavirus is the first crisis since the 1930s to engulf both advanced and developing economies together and put rich and poor citizens of whole world in the same sides. From history, if we like to receive learnings, we need to analyze the Spanish flu in 1918, Great Depression in 1930 and World Economic Recession in 2008.
The Spanish flu pandemic of 1918, the deadliest in history, infected an estimated 500 million people worldwide about one-third of the planet's population and number of deaths was estimated to be at least 50 million worldwide and the economy of each country was severely hit by recession until 1920. In 1920 the USA government and the European countries came with many programs on job creation to recover the economy.
Again in 2020-2021 during Covid 19 pandemic, number of infected people is23,61,69,511 and number of deaths is 48,22,794 worldwide as of now. People who don't have reserves or small savings, they took loan from relatives or from banks. Now if those people do not get back their business, small trade or employment in full, they would not be able to pay loan back with interest, may not be able to pay their rents, landlords won't be able to pay their electricity bills, gas, water, corporation's holding tax etc and thus the whole system may be set in a vicious cycle of economic crisis.
Most dark part is the job loss in Middle East due to depressed oil prices, job loss due to direct effect of Covid 19 pandemic. Bangladeshi Diaspora sent billions of currencies last year in Bangladesh as remittance because of thinking that they might go back home country permanently due to job loss.
Bangladesh has more than 50 million workers in the informal sector inside the domestic economy whose jobs partially or fully affected due to pandemic. Corona pandemic showed us technology intensive productions in agriculture is the need of the time. Those who live in advanced countries are now understanding sufferings of the poor as because they have shared a similar experience. The pandemic is also bringing us together in Zoom platform and other social media to discuss for recovering loss.
In Bangladesh, corona pandemic is likely to impact the economy through two important channels. More competitive price of RMG in the EU and the US market, and apprehension for low remittance by Bangladeshi diasporas in the Middle East because of job loss or low level of salary due low oil price. The primary destinations for Bangladeshi migrant workers are the Saudi Arabia and the United Arab Emirates. The drop of oil price of the OPEC countries is a high concern for our workers.
The economy of Bangladesh mainly depends on the garments sectors and foreign remittance. During 2018-19 garments export of our country is amount $34.13 billion sharing 84% out of total country export $40.53 billion. Now it may take time to get back previous glorious position of export earnings. Experts say, Bangladesh may need around two years to come back to its former position overcoming the crisis of corona pandemic. Fare, rent, export duty, transportation cost, cost relating to use of road, rail, sea port, electricity, gas, bank loan, tax structure may be readjusted to boost up exports. Massive injection of liquidity into the economy through purchase of Treasury bond and bills may be the best option to recover economy in full. At the same time continuous monitoring over inflation is needed. Extension of all matured letters of credit due to disruption of supply chain may be allowed after necessary scrutiny. Bangladesh Bank need to monitor the disbursement of loan given under incentive packages. Balance of Payment needs to be maintained strictly. The decline in imports already exceeds the decline in exports. The tax/GDP ratio must increase from existing level of 8.6 per cent to 12 to 15 percent. Meeting domestic demand needs to be given high priority. Domestic market of 116 million people needs to be explored. It is true that many firms in informal sectors may not return with the eventual recovery now. However, corona pandemic will open some doors of opportunities as well. We need to cultivate new demand for jobs in sectors like health care services, health care products, medicine, media of awareness campaign, digital divide, ICT architecture etc. Government subsidy or social safety net through online payment facilitating a cashless economy, sending remittance in formal banking channels increasing remittance, online justice delivery systems minimizing time, visit and cost (TVS), online education enabling students to receive transport hazardless quality education, online office transmitting a paperless green office concept which can be considered positive lessons of the Covid 19 pandemic 2020 in our history.
Bangladesh government's prudent policy option led by Prime Minister Sheikh Hasina expanded internet and mobile coverage to more than 110 million Bangladeshis or two-thirds of the population, who have access to the internet that immensely benefited economy during this pandemic. More and more internet providers with low-cost rate may come forward to extend their rural service with full network facility. Public spending for development of ICT based human resource needs to increase. Investment in health and education have increased for making these sectors internationally acceptable, again some more initiatives can be taken so that citizens do not need to go outside country for these facilities. Agriculture based technology and industry to be set up in full swings to boost up rural employment, so that this sector can play a vital role as a substitute to expatriate labor employment. Finally in simple words, creating domestic markets may create domestic jobs where our young people may be employed. They may prefer to work in home country than going abroad for work. Nonetheless, existing government spending where value for money is not realized fully needs to be readjusted soon for ends of creating employment opportunities for tens of thousands undeployed youth as prescribed by Keynesian Economists.
(Dr. Md. Shamsul Arefin is a former Senior Secretary).