Published in The Business Standard on 8 September 2020
The country’s economy has mostly bounced back shaking off the virus impacts in the last six months, helped mainly by large industries. However, small and medium enterprises, the informal sector and self-employment failed to improve much. People of those sectors are still at risk.
Health awareness among the country’s people is very poor. The government also lacks both the capacity and experience in dealing with disasters. Considering this, there was a major risk in the health and economic sectors during the novel coronavirus outbreak in March.
We thought that if the lockdown is not enforced properly and the government fails to provide financial support to the poor to continue the lockdown, the virus spread could then result in a total catastrophe.
However, our mortality rate and actual number of deaths is much lower than that in many other countries despite the widespread infections. To me, this is the major positive fact in the last six months.
When the shutdown ended, people resumed economic activities endangering their lives even amid the pandemic. Many were compelled to join work as the government gradually reopened everything. Therefore, the virus fallout on the economy has been less than it was estimated.
The country’s economy has mostly bounced back shaking off the virus impacts in the last six months. The manufacturing sector including large industries contributed the most to the recovery. On the other hand, small and medium enterprises, the informal sector and self-employment failed to improve much. People of those sectors are still at risk.
I have already said that the capacity of the government is limited. Government assistance could not reach out to the cottage, micro, small and medium entities to the desired level. Due to this, balanced recovery from recession is yet to be ensured.
The outlook of the agricultural sector was good even in the pandemic. Boro paddy yield surpassed the expectation this year. However, the prolonged floods have caused recession in the agricultural sector. This will make the economic recovery from the virus fallout harder.
To ensure the recovery, it is necessary to ensure food security as well as maintain food production. We need to provide food and financial support to the poor in rural areas and provide the farmers with seeds and fertilisers.
The export sector is on the verge of recovery since the brand buyers came forward. The recovery of the overall economy will depend on what measures the government will take in future. However, the government has already moved away from a number of initiatives that were taken up for recovery.
Individual level demand and consumption will be a major factor in the future for the country’s economic recovery. A large part of our manpower works in the Small and medium-sized enterprises (SME) sector. If demand for the sector does not climb, production will also not increase.
To ensure a complete recovery of the economy, small and medium enterprises need to be salvaged. Their access to government stimulus needs to be made easy. The rural economy also requires special attention.
Many people have moved to the villages from cities including Dhaka due to the pandemic. However, there are far fewer jobs in rural villages, and therefore those people have already become a burden for the rural economy.
We have to generate employment for those people in their respective villages. If necessary, they will have to be provided with bank loans to turn into entrepreneurs.
Dr Khondaker Golam Moazzem is the research director of Centre for Policy Dialogue (CPD)