Covid-19 impact: National poverty rate rises to 29.5% as of June

Bangladesh’s national poverty rate rose to 29.5% as of June, 2020 due to Covid-19, which cost tens of millions of people their jobs and brought them down below the poverty line.

Though the pandemic was reported in Bangladesh later than other countries in the region, it severely impacted the economic activities during the April-June period.    

As per the estimation of the General Economic Division, the country’s poverty rose to 29.5% as of June 2020, which was 20.5% in the last fiscal year. This estimation will be included in the 8th Five Year Plan that will be unveiled soon.

According to Bangladesh Bureau of Statistics (BBS) data, the poverty rate declined to 20.5% in the country at the end of 2018-19 fiscal year from 21.8% in 2017-18 fiscal year. The extreme poverty rate also came down to 10.5% from 11.3% during the period.

“As of June, the country’s poverty rose to 29.5% due to the pandemic, as a huge number of people, both in the formal and informal sector, lost jobs during the March-June period,” Dr Shamsul Alam, member of the Planning Commission (Senior Secretary) told Dhaka Tribune.

As of FY20, the total population of the country is 167.56 million. Among them, 49.43 million people are now in poverty.

But the rate of poverty will come down rapidly as about 95% economic activities have already reopened, said Alam adding that it started to decline as people are going back to work.

On the other hand, we are taking specific plans in the 8th Five Year Plan to pull the new poor out of poverty to restore the poverty rate where it was before the pandemic, said Alam.

Meanwhile, Bangladesh Institute of Development Studies (BIDS) in a research findings forecast that under a post-lockdown optimistic scenario, the country’s overall poverty would increase by 25.13%, where poverty in rural areas will be 24.23% and poverty in urban areas will be 27.52%.

It also projected that Bangladesh will have 16.4 million new poor in 2020 as the incomes of the working class in urban and rural areas have fallen sharply due to the prolonged lockdown.

How to bring down the poverty rate

“This [increase of poverty rate] is temporary and will come down, if Bangladesh can properly handle the health safety issues till the pandemic is over,” said A H Mansur, executive director of Policy Research Institute (PRI).

On the other hand, the mitigation strategy needs structural changes and it would not be like the traditional one, said the economist.

This new poor created by the pandemic are not like the traditional poor. For them, the government should provide financial support for the next six to nine months as these people lost their jobs or got laid-off but they will get back to work if the economy recovers, Mansur said.

In addition, the government can manage temporary employment under its different projects and social safety net programmes until they get regular jobs, he suggested.

“We need to reform the present social protection system to serve three categories of people such as extreme poor, moderate poor, and the new poor,” said Binayak Sen, Research Director of BIDS.

For this to happen, the country needs to ensure that the existing financial benefits reach the new poor category, he added. 

He also suggested linking the beneficiary participation in social protection programs with the NID cards digitally and ensuring the transfer of financial benefits to the deserving poor in this time of distress.