Asif Mahmud Arnob
Student, Department of Port and Shipping Management
Bangabandhu Sheikh Mujibur Rahman Maritime University
Bangladesh Economy after the COVID-19 attack:A Forecasting Analysis
Bangladesh represent itself as a mix economy country. Bangladesh ranks 29 among the Asia-Pacific region. Economic freedom score of Bangladesh 56.4. The Economics of Bangladesh has been progress so much in five years. Now the world rank of this country is 122. Coronavirus disease 2019 (COVID-19) is a respiratory tract infection caused by a newly emergent coronavirus, SARS-CoV-2, that was first recognized in Wuhan, China, in December 2019. Genetic sequencing of the virus suggests that SARS-CoV-2 is a beta coronavirus closely linked to the SARS virus. COVID 19 threaten millions of livelihood because of economic disruption. This country has more than 50 million workers informal. Till now around 15000 cases came to light and more than 200 people died. Coronavirus is spreading rapidly in Bangladesh but Government opened shops, markets, small business to cover the economic crisis of the country. If everything remain open the COVID pandemic can be more aggressive for people and the economics can be worse. From this report we will show you what will be the after effect of coronavirus in Bangladesh perspective. The report will be totally predictable research for us because of we do not know how many months it will need to be gone forever.
The History of Pandemics
People have spread across the world, infectious diseases also have spread as well. Outbreaks are nearly constant, though not every outbreak reaches pandemic level as COVID-19 .Disease and illnesses have plagued humanity since the earliest days. Widespread of trade has created new opportunities for people and animal interactions that sped up such epidemics. Malaria, influenza, smallpox, tuberculosis, leprosy and others first appeared during these early years. The more civilized people became (with larger cities, more exotic trade routes, and increased contact with different populations of people, animals, and ecosystems ) the more likely pandemics would occur. It is difficult to precisely forecast the probability of an epidemic-related downturn and/or how such a downturn could provoke a standard recession because this depends on how COVID-19 progresses and how this progress interacts with preexisting recession risks and policy responses (ranging from doing nothing to shutting down entire cities for months at a time). So we can assume that COVID-19 will effect on all the sectors of Economy of the World. As we know it has spread almost all around the world. It may hamper the GDP of the countries. But the sectors mostly effected are RMG , Import-Export ,Agriculture, Tourism and Shipping industry.
Here are some of the major pandemics that have occurred over time:
Some of the main findings of the previous pandemics effects on Economy of different countries of the world :
Zillow Economic Research (2020): Hong Kong, SARS, 2003 (Aggregated macro data)
1.75% loss in annualized GDP, or 5.1% monthly loss at peak. Quick recovery to trend after end of pandemic. 1.3% increase in unemployment; unemployment recovered within 3 quarters. Statistically insignificant 1.9% fall in home prices, count of transactions down by an average of 33% for duration of pandemic.
Lee and McKibbin (2012): Multiple countries, SARS, 2003 (Theoretical model)
2.63% loss in annualized GDP for Hong Kong, 1.05% loss for China. Size of loss depends on policy response.
Wong (2008): Hong Kong, SARS, 2003 (Micro data on 44 housing estates)
1.6% fall in home value, 2.8% in infected areas. 72% fall in transactions volume.
Siu and Wong (2004): Hong Kong, SARS, 2003 (Disaggregated macro data)
Shift to at-home consumption, away from travel, restaurants, and entertainment. Trade was mainly unaffected.
James and Sargent (2006, 2006a): Canada and US mild flu pandemic (Aggregated macro data)
Loss of Canadian industrial production of 1.2% at peak of epidemic (Oct 1957). 0.3% to 1.1% of annualized GDP. Coincided with a recession.
CBO (2006): US, mild flu pandemic (Theoretical model)
1% loss of annualized GDP.
Keogh-Brown et al. (2010): UK, mild flu pandemic (Theoretical model)
0.6%-2.5% loss of annualized GDP, depending on how customers shift their consumption behavior.
James and Sargent (2006): US, severe flu pandemic (Aggregated macro data)
1918 flu saw annual GDP impact of 0.5%, with loss of 7% of monthly industrial production at peak (Oct 1918). Coincided with drawdown surrounding end of World War I and a recession.
CBO (2006): US, severe flu pandemic (Theoretical model) 4.25% loss of annualized GDP.
McKibbin and Sidorenko (2006, 2006a): US, severe flu pandemic (Theoretical model)
5.5% loss of annualized GDP.
Cooper (2006): US, severe flu pandemic + trade disruption (Theoretical model)
6% loss of annualized GDP, of which 1.75% is due to trade disruption.
Zillow Economic Research (2020): US, severe flu pandemic, 1918 (Aggregated macro data)
9.5% loss in industrial production in October 1918 (peak of epidemic) vs. July 1918, but less reliable data on other sectors.
Kennedy, Thompson, and Vujanovic (2006): Australia, severe flu pandemic (Theoretical model)
6% loss of annualized GDP.
Douglas, Szeto, and Buckle(2006): New Zealand, severe flu pandemic (Theoretical model)
5-10% loss of annualized GDP.
Keogh-Brown et al. (2010): UK, severe flu pandemic (Theoretical model)
4.5%-6% loss of annualized GDP, depending on how customers shift their consumption behavior.
Despite the persistence of disease and pandemics throughout history, there’s one consistent trend over time that is a gradual reduction in the death rate. Healthcare improvements and understanding the factors that incubate pandemics have been powerful tools in mitigating their impact. It’s hard to calculate and forecast the true impact of COVID-19, as the outbreak is still ongoing and researchers are still learning about this new form of coronavirus.
COVID-19 impact on RMG sector:
RMG sector success is more important to an economy like Bangladesh, as apparel contributes 84 per cent of the country 's export, employing nearly 3.5 million people. When evaluating the potential effect of the pandemic on the apparel industry, it is necessary to look into the demand side scenario by examining the apparel export markets in Europe, the US and the emerging markets. Bangladesh’s readymade garments sector (RMG) has received job order closings of nearly $3 billion so far.That will impact around 2 million employees in the industries. Approximately 4 million workers are directly concerned with the RMG sector, e.g. the backward link industries, the goods and packaging companies and the transport industry. Overdependence of Bangladesh on the export of garments may prove to be its achilles heel. The postponement and deferment of large-scale orders is causing a sector-wide liquidity crisis, leading the President of BGMEA to call for help from both overseas buyers and government. The government responded by announcing a BDT 5,000 crore stimulus package explicitly targeted to export-led sectors. The main purpose of the stimulus package is to protect employment, promote daily wage payments and ensure the financially vulnerable apparel factories survive. Details of the program are still being worked out and the optimal delivery of the fund will require rebalancing.
COVID-19 Impact on Shipping Sector :
In April 2020, the Covid-19 pandemic is still raging unabated, impacting lives, companies, individuals and industries in ways that will change the world forever. The International Labor Organization predicts that a global recession brought on by the pandemic could wipe out as many as 25 million jobs worldwide. Governments have instituted "lockdown" in many countries to limit their citizens' movements and monitor the swift spread of the pandemic.
● As the pandemic raged around the world, there was a sharp focus on the plight of passengers and crew aboard cruise ships and the cruise industry.
● Some distributors and suppliers refuse to pick up their shipments and containers due to complete or closed warehouses. Some ports remain open, but have reduced workforce, exacerbating congestion in the cargo. This triggers supply chain disruption including the flow of vital goods and foodstuffs.
● The global epidemic has highlighted the vulnerability of global supply chains and put the scarcity of vital medical supplies required to fight the pandemic into sharp focus.
● The Philippines, China, India, and Indonesia are amongst crew members' main suppliers. The pandemic has caused some 40,000 Indian crew working on merchant and cruise offers free shipping to be stranded according to one estimate.
● Insurance consequences arise from the transportation and supply chaos due to the disease outbreak.
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