In the hustle and bustle of life across the world, the coronavirus pandemic has pushed a pause button for a bitterly long time. People worldwide face emotional losses due to losing family and friends to the deadly virus. In this persistent combat against the “invisible enemy”, governments across borders have taken strict measures to mitigate the virus that in turn causes economic hardship as a byproduct. It has been over a year since Bangladesh started its battle against the disease and due to frequent unplanned lockdowns people are faced with reduced income and expectation facing financial crisis like none other. What is the extent of the economic impact due to COVID-19?
Initially, due to reduction in international demand for ready-made garments (RMG) products, the domestic producers responded by lowering the output to mitigate their own losses. Due to the unprecedented global recession, Bangladesh took a big hit especially the RMG sector that accounts for more than 80% of the country’s export earnings (Siddiquee & Faruk, 2020). Before the vaccine was available in Bangladesh, real gross domestic product (GDP) growth rate was projected to fall to 5.24% for fiscal year 2019-20 from 8.15% in the previous year (Bangladesh Bureau of Statistics, 2020). General Wage Rate Index (WRI) published by Government revealed that point-to-point pre-pandemic growth rate 6.56% in January 2020 fell to 5.95% post-pandemic by third quarter of 2020 (Bangladesh Bureau of Statistics, 2020). WRI calculates the low-paid unskilled labor data paid on hourly basis and the negative impact on their economic life is statistically relevant; however, economic impact on day laborers, public transport employees to private school employees are beyond any statistical record.
RPDC aimed to carry out its own authentic research to discover the economic impact of COVID-19 on Bangladesh. An independent survey was conducted by RPDC through employing 28 surveyors across all 8 divisions of Bangladesh. Conducted in July 2021, surveyors have collected a total 1,420 responses aged 18 and over through phone calls. A snowball sampling technique was employed to collect information regarding their demographic profile, impact on current income and expectation of future income.
Figure 1: Number of unemployment due to COVID-19
In 2020, the official unemployment rate in Bangladesh increased by 1.1% mainly due to the job losses caused by COVID-19. The neighboring country India took even a bigger hit with the rate increasing by 2.2% from 2019 (Munni, 2021). Our survey results reported 108 participants among 1,420 participants are currently unemployed (7.6%) at the date. Among these 108 participants, 93 of them are unemployed since COVID-19 hit Bangladesh and 15 of them lost their jobs due to other reasons, marking a massive 6.5% unemployed people among total sample size due to COVID-19. Some of those previously unemployed people might have blamed COVID-19 as the main reason for continuously being unemployed. The pie chart illustrates the raw findings.
Despite the projections and considerable negative impact for certain individuals, the overall economic impact was not as bad as previously predicted. Government reported GDP growth for 2019-20 fiscal year at 7.74% despite the lockdown and partial setback to the economy (Bangladesh Bureau of Statistics, 2020). Government claims the economy is recovering well from the pandemic now that vaccines are available since February 2021. While countries like India are struggling to contain the pandemic denting their economy, the Chairperson of BRAC Bank attributes Bangladesh’s remarkable growth rate to excellence of export industry, remittence and private sector (Ethiraj, 2020).
It’s true that many industries were badly affected by the pandemic, but some industries excelled interpreting the challenge of pandemic as an opportunity. The consumer market through online platforms grew 70%, among which commodities and food business grew nearly three folds in just 2020. (Star Business Report, 2021). This was the result of decision taken by many existing businesses to start selling their products online and new entrepreneurs coming into the market, especially through Facebook. The e-commerce boom also stimulated the logistic service provider industry and gave jobs to many people including students in this time of crisis. Another industry that held its position was pharmaceuticals, maintaining at least half of its regular growth rate at 6.5% in the third quarter of 2020 (Haroon, 2021).
The survey was conducted in light of these extremes of economic distress and it was aimed at assessing the overall impact of the pandemic on participants’ personal/business income during COVID-19 in Bangladesh. They were asked close-ended questions to whether their income increased, decreased or had no change in the year 2020. The pie chart illustrates the finding.
Figure 2: Impact of COVID-19 on personal or business income
Figure 2 shows income increased for more than 1 in 5 respondents while one-third experienced no change in income. Nearly half the respondents claimed their income decreased during the pandemic while just over half of the respondents replied that the economic impact of COVID-19 has been either positive or neutral. The positive responses are found to be slightly higher among the younger respondents.
Bangladesh is still recovering from the pandemic. Now that COVID-19 vaccines are readily available for everyone, lockdown is expected to be lifted and more infrequent. This means industries will be able to operate their businesses without economic stagnation. It is safe to say that compared to the economic depression that many developed countries faced due to this pandemic, Bangladesh, being a developing country with relatively higher weight of young population, seems to have stood headstrong during this trying global times.
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(2020). Retrieved from Bangladesh Bureau of Statistics: http://www.bbs.gov.bd/site/page/dc2bc6ce-7080-48b3-9a04-73cec782d0df/Gross-Domestic-Product-(GDP)
Ethiraj, G. (2020, October). Why is Bangladesh’s GDP growing despite Covid-19, while other economies are contracting? Retrieved from https://scroll.in/article/976457/why-is-bangladeshs-gdp-growing-despite-covid-19-while-other-economies-are-contracting
Haroon, J. U. (2021). Pharma industry growth halves in 2020. Retrieved from https://www.thefinancialexpress.com.bd/trade/pharma-industry-growth-halves-in-2020-1610159516
Munni, M. (2021, June 3). Bangladesh's 2020 jobless rate up at 5.3pc: ILO. Retrieved from https://thefinancialexpress.com.bd/economy/bangladesh/bangladeshs-2020-jobless-rate-up-at-53pc-ilo-1622687503
Siddiquee, D. M., & Faruk, A. (2020). COVID-19’s Impact on Bangladesh Economy. BRAC Institute of Governance and Development.
Star Business Report. (2021, April 9). E-commerce sales rise 70pc in 2020. Retrieved from https://www.thedailystar.net/business/news/e-commerce-sales-rise-70pc-2020-star-business-report-2074621