Economists at a discussion programme have said that Bangladesh could not address post-Covid-19 challenges properly, which is required to keep the country's economy stable.
"Bangladesh managed Covid-19 challenges better than the USA. The vaccination rate in Bangladesh is also above the global average. But there is a lack of initiative to combat the post-Covid crisis especially to reduce inflation," said Yan Islam, adjunct professor, Griffith Asia Institute, Brisbane, Australia and former branch chief of Employment Policy Department, ILO, Geneva.
He made the remark at a lecture titled "Macroeconomic policy responses to the Covid-19 crisis in emerging economies: recent outcomes and evolving challenges" arranged by the South Asian Network on Economic Modelling (Sanem) on Monday.
So far, the Covid-19 claimed 6.4 million lives and caused a short but sharp recession in 2020, which was the worst since 1980. The world economy is now growing positively at a very moderate rate but it will take 2027 to recover the economic growth rate of the pre-Covid era, Yan Islam added.
He further said that the Emerging Market Economies implemented fiscal support worth 5.67 % of GDP up to September 2021. Bangladesh also announced support packages worth Tk1.9 trillion, about 6% of GDP with space from curtailing non-priority current spending and suspending low-priority capital projects.
He said that most economies increased policy rates at a substantial rate to combat challenges of inflation in the post-Covid era, but the central bank of Bangladesh took little initiative in this regard.
The policy rate is steady at 4.75% between July 2021 and April 2022, which increased to 5.50%. It is still low relative to the historical average of 6.75% between September 2009 and June 2022. Even the policy rate of 5.5% is a historical low in Bangladesh. Even there is no systematic evidence of asset purchase programmes in Bangladesh, he added.
He suggested that the Bangladesh bank takes proper initiative to tighten the money supply and stabilise the exchange rate. The midterm projection of Bangladesh indicates about 7% of growth for Bangladesh above the average of developing countries and a rate of inflation lower than the economic growth, the country should not worry about rising inflation.
He emphasises analysing numbers and said the average inflation for 40 years in developing countries is 24% but it is around 7.5% in Bangladesh. The tightening in the money supply to combat inflation reduces the scope of creating new jobs. The central banks are in the dilemma to protect jobs by combating inflation.
He identified the ensuring vaccine for all as an immediate global challenge in near future and said 72%of the population in high-income countries had at least one dose of available vaccines, with upper middle-income countries also at par. Lower middle-income countries lag behind and just 20% of the population in low-income countries had one dose.
Identifying the financing SDGs as a long-term challenge for the world, he said the SDGs financing gap is now more than $4 trillion.
Dr Selim Raihan, Professor, Department of Economics, University of Dhaka and Executive Director, SANEM discussed the lecture provided by Yan Islam at the programme moderated by Dr Sayema Haque Bidisha, Professor, Department of Economics, University of Dhaka and Research Director, Sanem.