• Wednesday, Oct 05, 2022
  • Last Update : 09:54 am

World Bank: GDP growth to crash to 2 to 3% in FY20

  • Published at 07:01 am April 12th, 2020
Empty-Streets-Dhaka-Covid-19-Mahmud-Hossain-Opu.jpg
Empty streets in Dhaka during shutdown Mahmud Hossain Opu/Dhaka Tribune

Coronavirus worsens inequaliPandemic to deepen poverty, South Asia’s worst performance in 40 yearsty, hitting hard the poor, informal workers in South Asia

The World Bank (WB) on Sunday forecast the grim picture for the economy, saying the country’s economic output would come down to 2%-3% in the current fiscal year as a consequence of the pandemic COVID-19.

The WB report, titled, "South Asia Economic Focus”, anticipated a sharp economic slump in each of the region’s eight countries, caused by halting economic activity, collapsing trade, and greater stress in the financial and banking sectors.

“Bangladesh’s economy will be significantly impacted by the COVID-19 pandemic. The decline in national and global demand for manufactured goods, particularly in the garment sector, risks creating unemployment and deepen poverty,” says the report.

“The urban poor will be hardest hit while the number of additional poor will be higher in rural areas. The national shutdown will impact private consumption. While growth is expected to recover over the medium term, downside risks remain, particularly from a domestic outbreak of COVID-19 and fragilities in the financial sector.”

“The extent of the impact of the pandemic will depend on the duration of the crisis and the mitigation measures taken,” said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan. 

“The Bangladesh government has acted quickly with public health directives, stimulus package, and scaled-up social protection programs. Earlier this month, the World Bank approved a $100 million financing to help detect, prevent, and respond to the COVID-19 outbreak and protect the people. We are committed to help Bangladesh tackle the pandemic, accelerate recovery, and build resilience,” added Mercy.

Regional growth to fall between 1.8% and 2.8%

In this fast-changing and uncertain context, the report presents a range forecast, estimating that regional growth will fall between 1.8 and 2.8 percent in 2020, down from 6.3 percent projected six months ago.

That will be the region’s worst performance in the last 40 years, with temporary contractions in all South Asian countries, adds the WB.

In case of prolonged and broad national lockdowns, the report warns of a worst-case scenario in which the entire region would experience a negative growth rate this year, it says further.

The decline in national and global demand for manufactured goods, particularly in the garment sector, risks creating unemployment and deepening poverty, it said. 

The urban poor will be hardest hit while the number of additional poor will be higher in rural areas. 

The report said the impact of the coronavirus will hit hard low-income people, especially informal workers in the hospitality, retail trade, and transport sectors who have limited or no access to healthcare or social safety nets. 

The report noted that the Covid-19 shock will likely reinforce inequality in South Asia. 

As played out across the region, the sudden and large-scale loss of low paid work has driven a mass exodus of migrant workers from cities to rural areas, spiking fears that many of them will fall back into poverty, it says.

While there are no signs yet of widespread food shortages, the report warned that a protracted Covid-19 crisis may threaten food security, especially for the most vulnerable.

"The Covid-19 crisis is also an urgent call-to-action moment to pursue innovative policies and jumpstart South Asian economies once the crisis is over. Failure to do so can lead to long-term growth disruptions and reverse hard-won progress in reducing poverty."

Recommendations

In the short term, the report recommended preparing weak healthcare systems for greater Covid-19 impacts, as well as providing safety nets and securing access to food, medical supplies, and necessities for the most vulnerable. 

To minimize short-term economic pain, the report called for establishing temporary work programs for unemployed migrant workers, enacting debt relief measures for businesses and individuals, and easing inter-regional customs clearance to speed up import and export of essential goods.

Once lockdown restrictions are loosened, South Asian governments should adopt expansionary fiscal policies combined with monetary stimulus to keep credit flowing in their economies, it recommends.

World Bank Chief Economist for the South Asia Region Hans Timmer said: "After tackling the immediate Covid-19 threat, South Asian countries must keep their sovereign debt sustainable through fiscal prudence and debt relief initiatives. “

"And looking beyond the present crisis, lie great opportunities to expand digital technologies for payment systems and distant learning to unlock remote areas in South Asia."

50
Facebook 50
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail