Countries across the globe, developed, developing and least developed, have been experiencing lower, and at worst, negative growth rates
The Centre for Policy Dialogue (CPD) has estimated that the Gross domestic product (GDP) growth in FY2020 is likely to come down to about 2.5%, under the most optimistic scenario if further 'general holidays' are not announced or stricter measures are not enforced during the rest of days of the fiscal year.
CPD made the disclosure during a virtual briefing on its report on "Challenges of Policymaking in Times of Pandemics" today.
Earlier, World Bank projected 2.0% – 3.0% GDP growth, International Monetary Fund 3.8% and Economist Intelligence Unit estimated 1.6% GDP growth for Bangladesh during outgoing fiscal year. The GDP growth of previous fiscal year was 8.15 percent.
The think-tank today also said in the report, "A significant part of the economy was affected by the lockdown and disruptions, both domestic and global during almost two-month long 'general holiday period'. Sectors such as manufacturing, construction, hotels and restaurants, transport, storage and communication and community, social and personal services are likely to be the hardest hit in this period.
Even if the claim of some policymakers is taken to be true that the economy was in course to attain an 8.2 per cent GDP growth in FY2020, our estimates of likely adverse impacts of the lockdown indicate a significant decline in GDP growth in FY2020."
"Countries across the globe, developed, developing and least developed, have been experiencing lower, and at worst, negative growth rates. Realistic GDP projections only help to understand the direction and range of the adverse impacts at macro-sectoral-household levels and thereby assist policymakers to take necessary measures," CPD report added.
The pattern of Bangladesh's growth trend will depend not only on the duration and evolution of the ongoing contagion but also on the appropriateness and adequacy of the remedial measures taken to counter the pandemic and subsequently for resumption and recovery of economic activities, effective implementation of measures and enforcement capacity and on ensuring an enabling political economy environment conducive to growth.
The revenue shortfall figure for FY2020, against the original target has been re-estimated to be around Tk. 125,000 crore. This implies, the revenue earnings in FY2020 is likely to record a minuscule growth of 0.4 percent; hence, revenue-GDP ratio may see a decline, CPD estimated further.
Emphasizing on raising health budget based on proper demand assessment, CPD said, "The health sector should get priority in the national budget for FY2021 for obvious reasons. The spread and scale of the pandemic have proved that there is no way to contain the Covid-19 without necessary resource allocations to the health sector."
The think-tank further projected that remittance inflow to lower-middle income countries (LMICs) of which Bangladesh is one, may decline by about 20 percent in 2020, while for South Asia the decline could be to the tune of 22.1 percent. Foreign direct investment (FDI) flow is also likely to contract in 2020 by about 35 percent.