The Financial Express

Economic toll of Coronavirus  

Published: February 22, 2020 22:04:46 | Updated: February 24, 2020 22:05:44

Economic toll of Coronavirus   

That Coronavirus outbreak, in addition to taking a human toll, would affect the global trade to a notable extent is now almost certain since it is deeply hurting the world's second largest economy, China. The countries that have sizeable dependency on China either for import or export would, naturally, suffer more. Bangladesh is one of those countries. Nearly 30 per cent of its import does come from that country. More importantly, most part of the raw materials and fabrics used by its apparel sector originates from China and this has become a sore point, lately.

Both the volume and value of all imports from China, according to a report published in this paper on Friday last, declined by 20.87 and 8.29 per cent respectively over a period of one and a half months, starting from January 01 last. During the same period, imports of at least 30 manufacturing sectors declined by more than three-fourths. The apparel sector is the worst-hit. Operators in this sector are reportedly finding it hard to locate alternative sources of import at costs that Chinese exporters have been offering. What is worse, local producers of raw materials and other accessories used in the apparel units have hiked their prices taking advantage of the situation.

The prices of most goods imported from China have gone up in the local market. It is natural that traders would try to make use of the opportunity. But, in some cases, the prices they have been asking for some Chinese-made items are irrationally high. This is true even for many goods that are available in sufficient quantities in the local market. All this is happening in the absence any sort of the monitoring by the relevant government agencies.

While both manufacturers and consumers are paying more for goods imported from China, the government too is losing revenue. The decline in transactions, particularly imports, with a dominant trade partner like China is bound to affect the government's revenue, in the form of customs duty, negatively. The National Board of Revenue (NBR) has estimated that if the problem of Coronavirus persists, it might lose 7.0 to 8.0 per cent of its targeted revenue from imports. Since most goods imported by the apparel units are duty-free, the extent of loss is unlikely to be in double-digit.

There is no denying that China remains to be the most stable manufacturer and supplier of all types of goods and services at competitive prices for many countries. Any disruption in that supply chain is bound to create problems. The situation might become serious in the event of any further prolongation of the Coronavirus-related crisis in China.

The government until now has kept its attention confined to blocking the entry of deadly Coronavirus and health issues related to it. But it has not yet taken stock of possible economic impact of the havoc this tiny organism is wreaking now in Asia and some other parts of the world.  It is high time the relevant ministries convened a consultation session attended by health sector people, businesses and policymakers. This might help the government draw a contingency plan for meeting any upcoming challenges arising out of further deterioration of Coronavirus situation. 

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