CPD’s founding Chairman Professor Rehman Sobhan has said that Bangladesh will need to emphasise on qualitative strengthening of its economic structure in the coming days to deal with the macroeconomic crisis arising due to COVID-19. Professor Sobhan made this remark in a telephonic interview with The Business Standard (TBS), where he answered three questions forwarded to TBS by Dr Zahid Hussain, former Lead Economist, World Bank.
Professor Sobhan feels that it is still early for Bangladesh to predict the magnitude of economic depression, as “We have really no idea as to the width and depth of the COVID crisis.” The main concern at the moment is that we are not having adequate testing of our mass population. To get the actual understanding of the extent of a public health problem such as this, it is important to determine the level of contamination, which will help the economists to make proper predictions as to the level of depression and possible way forward.
In answering a question on his reading on the macroeconomic crisis, the eminent economist observed that there is a sharp fall of exports due to COVID-19. The imports have also been affected. Professor Sobhan feels that there will be a rapid deceleration in growth. He further added that the crisis has shown that although poverty has reduced in Bangladesh over the years, people still remained vulnerable. Hence, our graduation to the middle-income stage is very fragile.
Professor Sobhan suggests that the structure of the economy should be strengthened qualitatively by demonstrating strength and resilience in revenue-generating capacity. Bangladesh’s range of exports needs to be widened—the narrow range of exports has caused a greater cause of worry due to shutting down of international markets for those products. Most importantly, the budget and management of the health sector need to be improved. He drew example of Vietnam of how good health management has led to lower number of infected people. Therefore, they will get back into economic activities sooner.
In commenting on the direction of policy stance to fight COVID-19, Professor Sobhan said, the supply-side is facing problems, therefore, outputs need to be stimulated. Also, demands need to be generated. The stimulus packages are designed to serve these objectives, and also the humanitarian aspect of the crisis. However, the responsibility of handling these packages is mostly being assigned to the banks. This raises the apprehension whether the banking sector, which is already facing serious problems, is prepared for this task at its current state of affairs. Thus, Professor Sobhan sees the bigger challenge is the implementation and management of the undertaken packages.
Lastly, Professor Sobhan comments that the stimulus packages aim to revive the economic activities in the economy. For this, consultation with experts from the healthcare sector and civil society will be very important.
To get the full interview, view the attached video.