The Financial Express

Ecological devastation and poverty: Lessons from Covid-19

Zubayer Hossen   | Published: April 12, 2020 21:20:33

Ecological devastation and poverty: Lessons from Covid-19

There is no denying that Bangladesh has made significant progress in reducing poverty. The moderate poverty rate has reduced to 24.3 per cent in 2016-17 from 58.8 per cent in 1991-92, while the extreme poverty rate has decreased from 41.0 per cent to 12.9 per cent during the same period (BBS, 2017). The headway in poverty reduction has been supported by stable economic growth. The economy has achieved, on average, 6.4 per cent of gross domestic product (GDP) growth during the years 2009-2018 (WDI, 2020). The steady growth helped Bangladesh to reach the lower middle-income country status in 2015. Nonetheless, Bangladesh, at its development stage, aims to achieve the larger national and global development goals such as Sustainable Development Goals (SDGs), Perspective Plan (PP), Bangladesh Delta Plan (BDP) etc. It desires to eradicate poverty, move up to the upper-middle-income country and become a high-income country, build an economy resilient to climate change and other environmental challenges, and promote a new skilled-based society.

So far, the efforts for income growth, human development, and vulnerability reduction have been remarkable. Nevertheless, Bangladesh faces daunting challenges in the coming years. One of the biggest challenges is reducing poverty to zero. Still, about 24 million people are living below the extreme poverty line. The growth elasticity of poverty for Bangladesh has declined in recent times. The growth elasticity of moderate poverty has declined from 0.32 in 2000-2005 to 0.16 in 2010-2016. During the same period, the elasticity has decreased from 0.33 to 0.10 for extreme poverty (Raihan, 2017). This indicates that the effectiveness of economic growth in reducing poverty has dented. Therefore, despite having a moderate growth rate, Bangladesh may find it a difficult task to achieve the goal of zero poverty (SDG 1). The business-as-usual effort from the state will not help much. The policy intervention allowing decent and productive employment will be required to bring down poverty to an expected level.

The country can achieve its growth aspiration of eradicating poverty and moving up within the upper-middle-income bracket with the right policies and timely action. Being at an important juncture, the Government of Bangladesh (GoB) needs to espouse balanced macroeconomic policies, promote effective social protection system, execute structural reforms, spend more on education and health, generate enough jobs, especially for young people aged 15-29, increase female labour force participation, raise productivity, invest efficiently in infrastructure, improve business environment, and address climate change related challenges.

Helping the poor people come out of poverty seems to be a mammoth task for Bangladesh and the current outbreak of novel coronavirus (Covid-19) can make it worse. The Covid-19 has already infected 202 countries, areas or territories. It is spreading quickly and affecting the world economy adversely. The exact impact is yet to be estimated since the pandemic is continuing. The extent of the damage will depend on how quickly the virus is contained and how much economic support states can deploy during and after the epidemic. However, it is evident that a global health crisis is turning into a global economic crisis as travellers cancel flights, businesses ask workers to stay home, and stocks fall. The Covid-19 has sparked economic uncertainty which could cost the global economy up to US$ 2.0 trillion in 2020 (UNCTAD, 2020). According to the Asian Development Bank (2020), given the highly unpredictable nature of the outbreak, global impact of Covid-19 could be US$ 77 billion to US$ 347 billion or 0.1-- 0.4 per cent of global GDP, with a moderate case estimate of US$ 156 billion or 0.2 per cent of global GDP. The economic impacts will have dramatic effects on the wellbeing of families and communities, in particular, the vulnerable people. The confirmed cases in many low-and middle-income countries indicate that many of the economic impacts may affect the world's most vulnerable populations.

The ongoing Covid-19 outbreak may have a significant impact on Bangladesh through numerous channels, including sharp declines in domestic demand, lower business travel, trade and production linkages, supply disruptions, and health effects. The scale of the economic losses will depend on how the outbreak advances. The hypothetical worst case scenario suggests a loss of US$ 3.02 billion or 1.1 per cent of GDP and around 0.9 million jobs (ADB, 2020). Like many other least developed countries (LDCs), the poorest and most vulnerable groups of the society, e.g., slum dwellers living in cramped conditions with poor hygiene and clean water supply, are at the highest risk in Bangladesh. The low-income people such as rickshaw pullers, peddlers etc. are losing and will continue to lose their income due to the outbreak. Food prices are in upsurge due to the pandemic. Also, many who are just above the vulnerable line may lose their jobs, see a cut in their earnings, and hence, become susceptible. This unexpected catastrophe is likely to make many people fall back into poverty and lead to a rise in the poverty rate.

Though these are still early days and the impact of Covid-19 in Bangladesh will be realised over the next few months, the development efforts to eradicate poverty may be seriously disrupted and delayed. The government will need to have quick, clear and decisive responses to mitigate the disruption caused by this outbreak. However, Covid-19 pandemic teaches us two important lessons. The pandemic is a result of ecological dysfunction. It shows that our ecosystem is in critical shape. The humans cut down the forest and expand industrial activities by which animal microbes have pathways to adapt to the human body. This ongoing disaster serves as a shock therapy to teach us how ecological devastation can drag people into vulnerability and poverty and thus, emphasises seeking ecological remediation. Furthermore, weaknesses of the institutions have become exposed because of the eruption of Covid-19. The flawed political institutions are generating inefficiencies, making the economic institutions fragile and creating mistrust among the people. In this situation, the whole thing may get out of hand and make the whole process of poverty eradication intricate. This underscores the importance of the presence of strong political institutions capable to handle the crisis.

Zubayer Hossen is Research Economist at South Asian Network on Economic Modeling  (SANEM).



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