The regional economic growth in eight South Asian countries, including Bangladesh, is likely to be between 1.8 and 2.8 percent in 2020, down from 6.3 percent projected six months ago, amid the fallout triggered by the Covid-19 pandemic, the World Bank has said.
Bangladesh and other South Asian governments must ramp up action to curb the health emergency, protect their people, especially the poorest and most vulnerable, and set the stage now for fast economic recovery, WB said in its twice-a-year-regional update released today.
This would be the region's worst performance in the last 40 years, with temporary contractions in all South Asian countries. In case of prolonged and broad national lockdowns, the report warns that this deteriorated forecast will linger in 2021, with growth projected to hover between 3.1 and 4.0 percent, down from the previous 6.7 percent estimate.
"The priority for all South Asian governments is to contain the virus spread and protect their people, especially the poorest who face considerably worse health and economic outcomes," said Hartwig Schafer, WB vice president for the South Asia Region.
Bangladesh's economy will be significantly impacted by the Covid-19 pandemic. Decline in national and global demand for manufactured goods, particularly in the garment sector, risks creating unemployment and deepen poverty. 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 impact of the pandemic 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 Bangladesh government has acted quickly with public health directives, stimulus package and scaled up social protection programs. To help government take immediate measures, earlier this the month, the World Bank approved $100 million financing to help detect, prevent, and respond to the Covid-19 outbreak. We are committed to help Bangladesh tackle the pandemic and accelerate recovery and build long-term resilience," said Mercy Tembon, WB country director for Bangladesh and Bhutan.
While there are no signs yet of widespread food shortages, the report warns that a protracted Covid-19 crisis may threaten food security, especially for the most vulnerable, and reinforce inequality in South Asia.
"After tackling the immediate Covid-19 threat, South Asian countries must keep their sovereign debt sustainable through fiscal prudence and debt relief initiatives," said Hans Timmer, WB chief economist for the South Asia Region.
The World Bank Group is deploying up to $160 billion in financial support over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery, and taking broad, fast action to help developing countries strengthen their pandemic response, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs, the report added.