Future bright as global economy rebounds

Despite a difficult struggle against the Cobid-19 pandemic, the advanced economies are recovering faster-than-projected pace and successes in vaccination drive put them well ahead of the rest of the world.

To benefit from the global scenario, Bangladesh needs to keep its economy open while enforcing health guidelines strictly to slow the spread of the coronavirus, business leaders and economists say.

According to the latest projections of the International Monetary Fund, the European Union, where lockdowns are still putting a dent in growth, will grow at 4.4% in 2021, well behind the estimated 6.4% for the US.

The pandemic cut gross domestic product by 6.6% in the EU and 3.5% in the US last year.

China's economy is also recovering fast from the Covid-19 pandemic, and the pace edges the Asian giant closer to the US economy.

China is experiencing a V-shaped recovery and its economy will expand 8.1% in 2021, a big jump from 2.3% of last year, the World Bank's latest projection says.

The US economy is proceeding faster than expected on the back of success in vaccination and a generous $5 trillion stimulus package.

However, the EU has been slower in vaccination than the US and many countries in the zone are under fresh waves of coronavirus requiring lockdowns.

About 33.5% of the US population have so far been inoculated, while the rate is 14% in the EU.

A faster global recovery is a good news for Bangladesh as its external trades account for more than a third of its GDP (36.76% as of 2019).

Bangladesh's exports saw an impressive 12% growth in March, putting the July-March total figure close to the pre-pandemic level of last year. The growth was driven by strong and steady performance from the knitwear segment, which posted 5.85% growth in the first nine months of the current fiscal year, compared to nearly 11% decline in woven garment.

Some other sectors like home textiles, agriculture, engineering products, pharmaceuticals, jute and jute goods showed a positive growth, making industry leaders upbeat about further progress towards an export recovery in the coming months.

"As far as our exports are concerned we are very much directly connected with the western economy. The sooner they will recover, the better our exports will grow," said Fazlul Hoque, a former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), whose sector led the export growth of Bangladesh till last month.

"Since we are in a process of rebounding, we will be able to proceed quicker towards a full recovery if the US and EU economies rebound fast," he said.

He had a guarded reaction to the health experts' call for a "curfew-like complete" lockdown and the government's announcement for a "strict" weeklong lockdown from 14 April.

"If we go back to lockdown and if we are to close our factories, it will be suicidal from the export point of view," Fazlul Hoque had told The Business Standard, hours before he joined a meeting with government officials on whether factories will be allowed to operate during next phase of lockdown.

Industrial economist Dr Khondaker Golam Moazzem holds a similar view. Global economic rebound will obviously have a positive impact on our economy – both on the export front and on the import front for supplies of raw materials, food and energy, he said.

A faster recovery in the US and Europe will mean a spur in consumers' demand there, which will make room for more exports from Bangladesh.

But a surge in Covid-19 deaths and infections has left the government with a tough choice – to go for a "curfew-like" lockdown to contain the spread of the deadly virus.

"Such a step needs to be a balanced one – strictly enforcing health safety guidelines with continuous monitoring and keeping the economy open on a limited scale," said Khondaker Moazzem, research director of the Centre for Policy Dialogue, a local think tank.

He explained why the next lockdown would be different from the one enforced last year, which people somehow managed to overcome with whatever savings and capital they had in hand.

"People are now left with nothing to spare. So a one-way approach will not be practical this time," he said, suggesting that not just export industries, all other industries should be allowed to operate for limited hours a day and in shifts.

"Otherwise, we will risk missing the global market potentials offered by the global economy which is on a recovery track," he said.

At the same time, health guidelines must be enforced strictly with big penalties for any violations in public spaces or factories, he stressed.