Bangladesh's economic impact due to COVID-19 pandemic has been felt in three main avenues-- a drop in domestic economic activity after announcement of shutdown, a decline in exports of ready-made garments and a fall in inward remittances.
Ragnar Gudmundsson, resident representative of the International Monetary Fund (IMF) for Bangladesh, came up with the statement in an interview with IMF Country Focus recently on different challenges faced by the country.
Describing the three areas, Ragnar Gudmundsson said they have found a drop in domestic economic activity, after the announcement of nationwide shutdown on March 26 to contain the spread of the virus.
"The second is a decline in exports of ready-made garments, which represent more than 80 per cent of Bangladesh’s export," the IMF representative said.
Ragnar Gudmundsson said overall exports of the country fell by 83 per cent year-on-year in April.
"Finally, there has been a fall in remittances from Bangladeshis living mostly in Middle Eastern countries, affected not just by the pandemic but also by the decline in oil prices," he added.
The IMF official acknowledged that the economy of Bangladesh had been growing close to 7 per cent a year on average over the past decade before the coronavirus outbreak.
"We now project 2 per cent for 2020—a drop of 6 percentage points from 2019," Ragnar said.
The crisis-related borrowings will raise the public debt-to-GDP ratio to about 41 per cent of GDP over the coming years, from 36 per cent at the end of 2019, he said.
Talking about the outlook for the future, the IMF representative said, "We are still expecting a pick-up in activity toward the end of 2020 and in 2021, with growth climbing back to around 6 per cent."
He said it is estimated that the country needs about $250 million for clinical equipment, testing, and contact tracing, just to respond to the initial impact.
"This amount will need to be mobilised with external support," the IMF official said.
The IMF representative informed that the organisation has approved emergency loans totaling around $732 million to help Bangladesh during this crisis.
Ragnar said although there is so much uncertainty and it is very difficult to ascertain with precision the recovery’s speed or extent, they still expect that Bangladesh would quickly come back to previous growth rates, if global economic conditions are supportive.