Many industries are shutting down in Bangladesh due to coronavirus. The small and medium enterprise sector is also being extensively harmed. Many people will be out of jobs. With a fall in purchasing power, people will spend less even on fundamental necessities such as education and health. This will lower people’s living standards. There will be an overall negative impact on the economy and the GDP growth fall drop too.
During the post-corona period, the use of technology will increase significantly in labour intensive industries and this will also create a dent in employment. The government will have to pay more attention to the small and medium industrial sector rather than the big industries in order to ensure that not too many people become unemployed. And this should not just be in the cities. Initiatives must be taken to help the people stand up again in the villages and small towns. If everyone can be given equal opportunities, the economy too will look up.
The impact of corona on our economy would not have been so critical if the banking sector was strong. In order to increase liquidity, Bangladesh Bank can reduce the SLR (Statutory Liquidity Ratio) somewhat and give the banks money by buying bills and bonds. If the state of revenue deteriorates further, the government can print money if it wants.
It is good that initiative has been taken to provide the common people with food and money, but it will not be possible to continue this for very long.
There will be all sorts of changes in the global economy too. This will have a negative impact on our readymade garment industry and other sectors as well. Oil prices have fallen in the Middle East and so this will slow down construction and other sector there. Our skilled workers in the Middle East will lose their jobs. That will deal a blow to our overseas remittance.
The impact of corona on our economy would not have been so critical if the banking sector was strong. In order to increase liquidity, Bangladesh Bank can reduce the SLR (Statutory Liquidity Ratio) somewhat and give the banks money by buying bills and bonds. If the state of revenue deteriorates further, the government can print money if it wants.
Salehuddin Ahmed is former governor, Bangladesh Bank.
