As we move forward, there is a need to create safer conditions for both businesses and public health
The world economy currently stands at one of the most precarious crossroads since the Great Depression of the 1930s.
Seldom in the past did policymakers, both in national and international institutions, encounter two burning crises so intimately entangled, that finding the delicate balance between global public health and the economy has never looked this challenging.
Countries that have not respected the severity of the current situation have either burned like Brazil – or those who have celebrated the so-called ‘end game’ a bit too early, like India, faced a new enemy – an outbreak of a more deadly mutation that brought havoc to the health infrastructure, culminating in catastrophic scenes that words cannot capture.
Yet, isolating a few specific cases of grave tragedies will not be enough.
We must retell ourselves what we have endured over the last one year. The global pandemic has resulted in the loss of more than 3 million lives since the outbreak of Covid-19; and the economic downturn resulting from series of lockdowns, movement restrictions and trade disruptions have culminated in a contraction of world output by -3.3% in 2020.
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But the bad news does not end there.
There have also been significant reversals in poverty reduction too.
The latest April 2021 World Economic Outlook notes that the economic fallout from the global pandemic has pushed an additional 95 million people to the ranks of the extreme poor in 2020, and it created 80 million more undernourished than before.
These statistics offer a poignant reminder concerning the human cost of the ongoing crisis.
Bangladesh, against that background, have so far managed to escape the worst side of the current calamity.
With prudent management of the health crisis and a bit of luck, we have so far avoided scenes that are visible in India or Brazil.
Yet, it will be too early to put our guards down or celebrate. And as we move forward, there is a need to create safer conditions for both businesses and public health.
This amplifies both the importance and usefulness of the upcoming national budget.
The National Budget remains both a fiscal instrument and a political torch.
It is not only seen as a means to boost growth, generate employment, reduce poverty, and maintain macroeconomic stability – it is also a mechanism to prioritize sectors and investments that can give a country both competitive edge and strategic importance.
Its composition is shaped by the environment within which it is formulated, while it carries the unwritten burden of meeting the expectations of all the small and large economic agents who compete within our economy.
But what are those expectations?
If we look at both standard and non-standard indicators of economic performance of Bangladesh – it is evident we have performed better than out neighbours with economic growth expected to be close to 5% or more for FY21.
Yet, that does not totally capture our story.
Throughout this pandemic-stricken fiscal year, we have seen at least two episodes of critical health facility shortages when our healthcare infrastructure was almost overwhelmed, with the situation only coming within manageable means after a lockdown.
This should be enough to remind us that we are still not out of the woods – and more resources and institutional support for the health sector should receive upmost importance in the upcoming national budget.
It is unfortunate to underscore that as a nation – the state only allocates less than 1% of our GDP to health; an outcome that is rooted in elite neglect for our domestic health sector over the last five decades.
The ongoing health crisis has also meant that lockdowns have become a critical element of the ‘new normal’ of our reality – and it has heterogeneously affected different sectors.
Some independent studies have, in fact, identified how millions might have slipped back into poverty – even though the exact numbers are contested by economists.
Even so, it will not be incorrect to think that some pockets of deprivation have been created – and we need targeted social security instruments to ensure better management.
Unfortunately, poverty surveys are not frequently undertaken by the state authorities – and this lack of timely data marks a critical weakness in our capacity – an area that both the budget and policy agenda must address.
Consequently, to manage this rather precarious delicate balance between public health and the economy, the national budget in FY22 must offer conspicuous commitment to public health and social security.
This does not mean the routine investments in other areas are not important. But measures and initiatives that can create safer and secure conditions for businesses and social activities must receive political commitment.
This, in turn, will create a more confident economic environment that can stimulate a steady resurgence of the overall economy.
Playing it safe might not always sound like the most brilliant plan, but at times – that is the only wise thing we can do.
The author is senior economist at the Policy Research Institute of Bangladesh (PRI) and member secretary at Bangladesh Economists’ Forum (BEF). He can be reached [email protected]
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