Ahsanullah University of Science and Technology
Assignment on “Effect on Covid-19 on the economy of Bangladesh:
Problems and Possibilities
Course Title: Economic profile of Bangladesh
Course No: BBA 314
Submitted To:
Nazifa Nuzhat
Department of School of Business
BBA Program
Submitted By:
Md Rakib Mia
ID: 170202087
Year: 3rd year 1st semester
Section: B
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Table of content
Page
S.N Topics number
1 Introduction 3
2 History of Coronavirus 4
3 Coronavirus Impacts on Bangladesh economy 5-8
1. Impact on Ready-Made Garments (RMG) Industry 6
2. Impact on Remittance Earnings 6
3. Impact on small business and other areas 7
4. Challenges for the financial sector 7
5. Impact on Self-employment 7
6. Increases unemployment rate 7
7. Impact on Poverty 8
4 Possible solutions to solve the economic crisis 8-9
1. Workplace security and democracy 8
2. Immediate freeze on dismissals 8
3. Diversification of Export products 8
4. Job guarantee 9
5 Conclusions 9
Figure-1 4
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Introduction
Coronavirus are a large family of viruses which can be the cause of illness of death or animals
and humans. Covid-19 (Coronavirus disease 2019) is a new type of coronavirus which originated
in Wuhan of China in late December, 2019. Wuhan is a city in China and there is seafood market
in this city. This Covid-19 has originated from this seafood market. Since then, this fatal and
contagions virus has started to infect from one person to another through the droplets of sneeze
and cough. The symptoms of Covid-19 are cough, fever and severe shortness of breath. Covid-19
can cause severe respiratory problems, kidney failure or death. Specially, those who are old and
those who are suffering from diabetes and heart problems are more vulnerable to this disease. On
February 11, 2020, the World Health Organization (WHO) has declared the disease coronavirus
disease 2019 (COVID-19) and it as a pandemic.
At present, Covid-19 has spread nearly in 200 countries and millions of people of the world are
being infected with it. This Covid-19 is creating a panic in all the continents of the world and
bigger cities, famous places and even religious places have been locked down. Bangladesh is not
free from this Covid-19 either. According to WHO, washing hands with soap and hand-sanitize
for twenty seconds after touching anything or anyone, using facemasks, staying at home,
avoiding public gathering and drinking water frequently are important for prevention to it.
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History of Coronavirus
Figure-1
The history of human coronaviruses began in 1965 when Tyrrell and Bynoe found that they could
passage a virus named B814. It was found in human embryonic tracheal organ cultures obtained
from the respiratory tract of an adult with a common cold. The presence of an infectious agent
was demonstrated by inoculating the medium from these cultures intranasally in human
volunteers; colds were produced in a significant proportion of subjects, but Tyrrell and Bynoe
were unable to grow the agent in tissue culture at that time. At about the same time, Hamre and
Procknow were able to grow a virus with unusual properties in tissue culture from samples
obtained from medical students with colds. Both B814 and Hamre's virus, which she called
229E, were ether-sensitive and therefore presumably required a lipid-containing coat for
infectivity, but these 2 viruses were not related to any known myxo- or paramyxoviruses. While
working in the laboratory of Robert Chanock at the National Institutes of Health, McIntosh et al
reported the recovery of multiple strains of ether-sensitive agents from the human respiratory
tract by using a technique similar to that of Tyrrell and Bynoe. These viruses were termed “OC”
to designate that they were grown in organ cultures.
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Severe acute respiratory syndrome (SARS) and Middle Eastern respiratory (Mers) are both
caused by coronavirues that came from animals. In 2002, SARS spread virtually unchecked to 37
countries, causing global panic, infecting more than 8000 people and killing more than 750.
In 2004, van der Hoek et al reported the discovery of a new human coronavirus, NL63, isolated
from a 7-month-old girl with coryza, conjunctivitis, fever and bronchiolitis.
Coronavirus Impacts on Bangladesh’s economy
➢ The Covid-19 pandemic has caused unprecedented economic loss, which was more severe in
the first half of 2020 than was earlier anticipated. The International Monetary Fund (IMF)
World Economic Outlook Update (June 2020) has projected negative global growth of a
higher magnitude (-4.9 percent) in 2020. This is due to several factors. First, there has been a
major downturn in GDP growth, particularly in the second quarter of 2020, especially in the
advanced economies (-8 percent), the oil-exporting countries such as Saudi Arabia (-6.8
percent), and the Middle East (-4.7 percent). China will grow at 1 percent only, while India's
growth will contract by 4.5 percent. In 2021, positive global growth is projected, but it will
still be below the 2019 level.
➢ Consumption and services have also declined sharply due to declines in output (20-25
percent), with consumer expenditure declining by around one-third, according to the
organization for Economic Co-operation and Development (OECD) in June 2020. On top of
this, the pandemic has caused huge unemployment—around 305 million full-time jobs across
the world—with the youth and women being more disproportionately affected.
➢ According to the World Trade Organization (WTO), global trade will experience
considerable negative growth (-13 percent) due to the pandemic, which will contribute to the
projected negative global growth as well. Finally, prices of almost all commodities have
declined sharply, especially crude oil prices, declining by half, from USD 60 per barrel of oil
in October to December 2019, to USD 30 per barrel of oil in May 2020.
➢ How will this impact Bangladesh? Bangladesh's GDP growth, which has averaged around 8
percent during the past few years, has been disrupted by the outbreak of Covid-19. The
incidence of poverty has also increased, and over two million people could be added to the
ranks of the poor in 2020. The reported number of unemployed people now ranges from 10
million to 15 million, compared to 2.7 million in 2017.
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There are several area in Bangladesh which Covid-19 has been bringing set back on economy
resulting Bangladesh is in critical position, the following areas are:
i. Impact on Ready-Made Garments (RMG) Industry:
The RMG sector is the biggest source of foreign currency earnings for Bangladesh. As a rule,
economic slowdown in Europe and North America is of particular concern for Bangladesh as
these are the principal markets for Bangladesh's principal export product -- readymade garments
(RMG). These two regions are also expected to continue to slowdown at least for next six
months or more and that has implications for 4 million workers in the RMG industry in
Bangladesh.
Also, RMG generates close to $30 billion in exports accounting for 83 per cent of total exports
and 14 per cent of GDP. Now the industry is in deep crisis as exports plummet due to the
cancellation of purchase orders from Europe and North America. According to the Financial
Express of May 9, merchandise exports dropped by 61.57 per cent equivalent to $1.46 billion in
May this year compared to the same month last year (2019).
ii. Impact on Remittance Earnings:
The remittance, the second biggest source of income for Bangladesh, has helped the economy by
boosting foreign exchange reserves. It has helped to reduce poverty at the national, household
and individual levels as well.
Bangladesh received USD 18.20 billion remittances in the fiscal year (FY) of 2019-20, compared
to USD 16.42 billion in FY 2018-19. However, due to the outbreak of the pandemic in major
destinations for Bangladeshi migrant workers (Middle Eastern countries, USA, UK, Malaysia
and Singapore) and the drastic fall in global crude oil prices affecting the Middle East countries,
growth in remittances will quite likely slow down. The pandemic is pushing our migrant workers
into unimaginable vulnerabilities. If this situation continues, the Middle East’s oil-dependent
economics will have to bear the brunt of the losses. Most of the expatriate income of Bangladesh
comes from this region. A number of thousands of workers have already been decided to send
back to Bangladesh.
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iii. Impact on small business and other areas:
At time of economic turmoil, SME’s and other areas are usually the worst hit. Raising fund is
difficult as it is, for SME’s. when it comes to SME’s, in an environment of 6% and 9% access to
finance will become more difficult as banks will be reluctant to make SME loans at 9%, since
SME’s operation are more expensive for banks.
Airlines and hotels have also been badly hit. RMG factories are shutting down and workers are
going to the villages. These creates pressure on the rural economy at a time when urban-rural
economic linkage, also have been severely disrupted.
iv. Challenges for the financial sector:
As the effects of COVID-19 intensify, given that there have been several large-scale order
cancellations for RMG clients, many loans may go in default, which is worrisome for the
financial institutes.In the coming months, government sector bank borrowing may decline. This
is because large projects such as padma bridge, karnaphuli road tunnel etc. since, China is also
expecting an economic recession therefore, the implementation of these projects would be
adversely affected.
v. Impact on Self-employment:
Self-employment in developing countries like Bangladesh, often serves to cushion the impact of
economic shifts. But it might not do so this time due to severe restrictions being placed on the
movement of people and goods. Reduction in access to work will also mean large income losses
for workers. The ILO study estimates these USILO study estimates these USILO study estimates
these US$3.4 trillion by the end of 2020. This will translate into falls in consumption of goods
and services, in turn affecting the prospects for businesses and economics.
vi. Increases unemployment rate
According to a recent estimate by the Bangladesh Institute of Development Studies (BIDS)
• Covid-19 has eaten away the jobs of 16 million people in Bangladesh. The continuing
lockdowns and economic fallout of the Covid-19 pandemic could leave tens of millions
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of workers jobless in coming months and have an outsized impact on the most
improvised countries like Bangladesh.
• The pandemic has resulted in unemployment of around 39% of the informal sector
workers.
vii. Impact on Poverty:
The number of people who live in poverty despite holding one or more jobs will also increase
significantly. It is estimated that between 8.8 and 35 million more people will be added to the
ranks of the working poor.
Possible solutions to solve the economic crisis
Bangladesh is now facing a critical period in its economic history. However, necessary step have
to be taken to keep the daily necessities market stable. The following steps are-
i. Workplace security and democracy:
We must change what got us here, and boost workplace security and democracy. The
government should also introduce new social safety net programmes targeting the labor market.
In this context, the employment guarantee scheme for the next six months for vulnerable people
can be seriously considered. The modalities can be sorted out.
ii. Immediate freeze on dismissals:
Because so many have already lost their jobs, we need an immediate freeze on dismissals, as
France, Italy and Spain have done, and to cancel the dismissals that have taken place since
March. We must remember that fear will dissolve with a credible recovery plan.
iii. Diversification of Export products:
Bangladesh’s economic growth is in a strong position. In order to maintain this condition, the
continuity of the economy must be maintained. Emphasis should also be placed on
diversification of export products to prevent the economy from slowing down due to the corona
effect. However, this push will not come from one side only. It will have an impact on
technology product, garment products, daily necessities, and even communications. Thus, the
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government is struggling to take multi-pronged measures to eliminate the problem of
unemployment in the country.
iv. Job guarantee:
Staff layoffs will not be a permanent solution. So, ultimately, the government has to provide
everyone with a job guarantee and a fair income by filling the gaps of our social security system.
This is what the Universal Declaration of Human rights requires: universal social security and
the right to work for fair pay.
Conclusions
The virus can cause pneumonia. Those who have fallen ill are reported to suffer coughs, fever
and breathing difficulties. Some person to person spread of this of this virus outside China has
been detected. In severe cases there can be organ failure. The diseases, recovery depends on the
strength of the immune system. The WHO has declared the outbreak to be a public health
emergency of international concern.
Coronavirus is isolating one country after another in fear of the world and the coronavirus is not
just a health risk, it is shaking the entire world economy. All the big global events starting from
the stadium game are going to be closed. Economic activities are declining due to the closure of
schools, colleges and businesses. Airlines around the world are losing money due to travel bans.
Large companies are in danger of defaulting on loans. Everyday the crash is taking place in all
major stock markets. As a result, Bangladesh’s GDP growth may slow down. People can lose
their jobs.
Covid-19 will have exposed areas for improvement in the health care system, IT infrastructure,
diversification, workplace cultures, and adeptly of public and private sector leadership.
Bangladesh may face the security of the global economic recession and need to focus on the
solution to overcome this unwanted situation.
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