A V-shaped economic recovery is still within reach. But the general public must play its part.

Optimism is a disease, the polemical British-Indian novelist Salman Rushdie once said, and talking with Manmohan Parkash, the country director of the Asian Development Bank, one can’t help but catch that disease.

He is sanguine about Bangladesh’s long-term growth; he feels the country is now where South Korea was about 30 years ago. And he is holding out for a V-shaped economic recovery from the coronavirus-induced slowdown.

“The Bangladesh growth story is very interesting. In 1971, when Bangladesh was born, not many predicted a very bright future,” he told The Daily Star in an interview recently.

But those naysayers were proven wrong with what Bangladesh has achieved in the last 10 years, whether it is in terms of human development indicators or in terms of economic growth.

“We can always debate about percentages here and there. And I am not a person who goes too much into percentages, but I look at the progress made on the ground when I go to rural areas, when I talk to people, when I go to some of these far-flung areas.”

“So I think that’s what I take as an index of development. I think it’s a good story. And we must contribute to the story,” said the Indian national while sat in his home in Chandigarh.

Which is why, ADB has rallied around Bangladesh as soon as the country announced its first confirmed cases of COVID-19 in the first week of March, hoping to save both lives and livelihoods.

The Manila-based multilateral lender has provided $601.3 million in loans and $1.58 million in grants since the pandemic began, all to quickly send Bangladesh back to its high growth path.

“It is a work in progress. This is just our immediate response. But, I think, as time progresses, and there is a need for more, we will certainly work with the government to make sure we can help them in this difficult time.”

On the economic recovery front, two scenarios are possible: a V-shaped recovery and a U-shaped recovery.

In a V-shaped recession, the economy suffers a sharp but brief period of economic decline with a clearly defined trough, followed by a strong recovery.

A U-shaped recession is longer than a V-shaped recession and has a less-clearly defined trough. GDP may shrink for several quarters, and only slowly return to trend growth.

But Parkash, who has been in Bangladesh for the past two-and-a-half years and in Manila in the previous 15 years, is leaning more towards the former.

“If you look at it before the pandemic, Bangladesh happens to be a country with moderate fiscal deficit, moderate government debt, moderate current account deficit, inflation in control. Before the pandemic, things were going quite well.”

But the pandemic has brought an end to this purple patch.

Parkash is hopeful that the disruptions from the export market and remittances and others can be offset through an increase in domestic consumption. And that can be done through more proactive actions on the fiscal and monetary sides.

“So what we are hoping is that the V-shaped recovery could take place,” he said, adding that the difference between a U-shape and V-shape recovery is how quickly the health crisis can be brought under control.

And the onus of flattening the curve on coronavirus does not lie squarely on the government’s shoulders; cooperation from the people is going to be very critical.

“Whether you will wear a mask, whether you will do social distancing, whether you will follow the lockdown rules, this is all about behaviour change. It is less on the government and more on the people to maintain those things.”

And getting people to modify their behaviour to suit the pestilential time we are in has not been easy. But behaviour change is fundamental to managing the health crisis and staging a quick economic recovery.

“I think one of the big challenges for us in this part of the world also is how do we get people to really obey what is good for them?”

But it is not that the government does not have a part to play.

Health should take centre stage in the budget for fiscal 2020-21 that Finance Minister AHM Mustafa Kamal is set to unveil tomorrow.

“Countries that invested more in health, they have been able to manage this pandemic much more easily, they have lost fewer lives,” he said, citing Germany, Japan and South Korea as cases in point.

The health budget should not just go towards increasing the number of hospital beds but also towards prevention, health management and the surveillance side of it.

After health, social protection should get the focus.

“Bangladesh has achieved good progress in poverty reduction in the last few years but this pandemic has put that progress in peril. So suddenly more attention will be needed for social protection support.”

The budget could look at making the social safety net more sustainable and it could also look at how to get the benefits directly into the hands of the beneficiaries more quickly, more transparently, with no leakages, said Parkash, who holds a postgraduate degree in Management of Public Enterprises from the University of Punjab and a bachelor’s degree in Mechanical Engineering from the Indian Railway Institute of Mechanical and Electrical Engineering.

Agriculture and food security should get the third priority in the upcoming fiscal year’s budget.

Modernisation of agriculture, mechanisation in harvesting, and storage and warehousing should get emphasis.

The budget should also have an oversize employment generation programme given the hordes of returning migrants and the numbers that have lost jobs for the two-and-a-half-month-long pause of economic activities.

This brings us to the topic of lives versus livelihood debate. Was the government right in lifting the movement control order from June 1, at a time when the caseload and death toll was escalating?

Parkash appeared to be sympathetic to the government’s compulsion. But a staggered opening would have been judicious.

“One needs to really understand that both lives and livelihoods are very important.”

Risks from coronavirus are high, but the demand to protect the livelihoods of particularly the day labourers, the informal workers and the daily wagers are important, too.

“You know, when you have a situation where, yes, less people are dying, but imagine if we have more people dying of hunger. It’s a difficult choice to make,” he said, while advocating striking a delicate balance between normalising socioeconomic activities and containing the spread of the virus.

So how can the government find the balance?

He suggests ramping up of the health care procedures, such as testing, tracing and identification, as well as the systems and supplies.

And the non-health-related actions would be to ease up the supply chains, logistics, and the speed of the movement of the essential goods and services.

“We have to be pragmatic while letting the economic activities start but maintain the basic health instructions so that whatever gains have been made over the years, we should not let this coronavirus outbreak lose it. The goal should be to sustain the progress that you have achieved so far.”

Which brings us to the topic of what can be done to build on the progress before the pandemic hit in the medium- and long-term.

Parkash feels the pandemic has given the government to reset it industrial policies and many other development goals.

Diversification of the export basket now seems a real possibility, given the shipment of medicines, PPE kits and face masks of late. And there have been talks of export of medical equipment like ventilators, too.

And then there is the matter of companies looking to relocate from China and into new places, and the government should give an honest shot at attracting some of those companies by rolling out the red carpet.

“What I am trying to say is that this pandemic has given us a lot of challenges. But at the same time, I also see that it is opening up several opportunities.”

For starters, the government must bring down the cost of doing business. After that, the government should go for some targeted industries and provide the incentives, support and skilled labour.

It is the latter that is most fundamental in making the most of the country’s coveted demographic dividend.

“Bangladesh has done well in primary and secondary, but where you really need to invest now is in tertiary education, skills development, skills education, internships. I also feel another area the country can invest in is new technology.”

Parkash is a great believer in new technologies.

“So you look at the average Bangladeshi student, they are so tech-savvy. We could really use them in some of these new areas like robotics, artificial intelligence, IT, data analytics, the Internet of Things, biotechnology.”

Globally, these are the trades that are hugely in demand and there is a short supply.

“Right now, Bangladesh has a huge demographic dividend and it does have a population that is very eager to do well. You know, if you look at Korea 20-30 years ago, this is exactly how it was then. They had a desire to do well in life and make their country big and look where they have gone.”

So similarly, in Bangladesh, the youth should be at the centre of its development and they are exceedingly innovative. “And if we can give them a proper ecosystem, if we can give them a proper kind of environment, I am sure they can do wonders.”

Other than investing in people, in the medium- to long-term Bangladesh needs to invest more in infrastructure, invest much more in climate change, disaster resilience, sustainable urbanisation and also create an equitable society.

But that is in the long-term and medium-term; to get there one needs to overcome the short-term challenges, which are centred on the pandemic.

The role of multilateral lenders has been important in fighting off the impact of COVID-19, so one can wonder if Bangladesh would run into a debt servicing problem.

But Parkash remains upbeat.

“If you look around, Bangladesh has been one of the more responsible borrowing countries. If you look at the debt to GDP ratio, Bangladesh probably today has one of the lowest ratios in the region. And I must say with my own personal experience, Bangladesh looks at the cost of borrowing every time we actually have a loan negotiation. They look at the cost of borrowing, they look at the tenor, they look at the terms. The track record has been quite remarkable.”

His only suggestion is the country should continue in the same vein: be very prudent, be very pragmatic and use the money in a judicious way.

Another thing that is working in Bangladesh’s favour is the cost of borrowing, which is very low.

“In a low interest rate environment, borrowing makes a lot of sense, particularly when your own financing, when your own revenue side is having some issues.”

Going forward, ADB would be providing more financial support and with favourable terms and conditions as Bangladesh is one of its choice borrowers.

“From my perspective, this development story should continue. There is not another country where I see a 6-7-8 per cent growth rate for such a long time. You know, ten years is a long time. I am hopeful that very soon we will all come out of this crisis. And after that, we will be back on the high growth path that the country had witnessed all these years.”