Call to enhance quality of economic growth

Quality of growth is the most important issue for the economic uplift of a country, said speakers at a programme on Saturday.

In their view, productivity leads to growth but that has to be inclusive so that economic development can bring about a qualitative change in people's lives and livelihoods.

The speakers made the call at the ninth session of the South Asian Network on Economic Modeling (SANEM) Forum on Economic and Social Recovery on a virtual platform.

SANEM Research Director Prof Sayema Haque Bidisha presented the keynote article at the discussion, which was moderated by Executive Director Dr Selim Raihan.

In her speech, Prof Sayema Haque said there are a number of challenges ahead for the recovery of the economy, including the second wave of Covid-19, which is a probability.

She added that, "If the second wave hits Bangladesh and the countries associated with Bangladesh's export trade, the country's economy may also fall into a crisis. As a result, remittances may be affected."

On the stimulus package, the Dhaka University Professor of Economics said ensuring proper implementation of incentive packages by the government at all levels, including the grassroots, is a big challenge.

She stressed the need for giving importance to the informal sector, adding that coronavirus infections must be brought under control.

"Preparations need to be made so that the second wave of the coronavirus does not actually affect domestic demand and private investment," added the keynote speaker.

In the paper, she called for special initiatives for informal workers and returning expatriate workers in order to increase employment opportunities for them.

The economist observed that there are two important issues relating to Bangladesh's development -- expatriate income and garment industry and in these two cases, Bangladesh is still in a good position.

The IMF estimates that Bangladesh's per capita GDP will be higher than India's.

Focusing on economic recovery, Sayema Haque said although there were many questions about the implementation of the incentive packages, the initiative was announced in a timely manner.

Remittances helped turn the rural economy around, ensuring a solid foundation for agriculture and food security.

Regarding the proper use of foreign currency, she said the scope for use of foreign exchange reserves is very limited. There are various coordination issues involved.

Later, in response to a question, she said if cottage industries, small scale industries and medium industries are seen to be more categorized, overall policy formulation will be more effective.

SANEM Executive Director Dr Selim Raihan also addressed the session.

He pointed to a lack of coordination in initiatives to revive the economy. This issue should also be considered at the policy-making level.

Selim Raihan observed that some sectors are recovering and some are not. Overall recovery is not possible, as he put it.

He emphasised the need to focus on economic recovery as well as social recovery. Parallel recovery is needed to address the effects of the coronavirus in education, health, poverty, inequality and so on.

Expatriates' income has served as an informal social security fence among families, he noted.

Focusing on the positive growth of the macro-economy, he said: "It is due to the positive impact of the two influential sectors, expatriate income and the garments sector."

"But it remains to be seen whether this will have a positive impact on other sectors of the economy."

On the challenge of recovering the economy of Bangladesh, Prof Selim Raihan maintained that investment is currently in an unprotected state. There is a significant adjustment cost in economic recovery at the household and business levels.

"So there is no alternative to the vaccine in case of strong recovery," he commented.

"We have to come out of growth-centric goals and move forward with long-term goals," he stated, adding that issues like poverty, inequality and employment should be given due importance.

Mahtab Uddin, a research economist at SANEM, discussed in detail the limitations of incentive packages and how effective they have been.

How effective cash incentives can be at the moment is also a question, he said, suggesting that alternatives other than cash incentives may be considered.

The speaker maintained that effective demand for borrowing has decreased and liquidity is much higher now.