Economy on a recovery track

From the health point of view, Covid-19 appears to be no longer a priority for the government.

This is reflected in the number of daily tests which have declined to 10,000-15,000 levels from 25,000-30,000 tests per day. Optimally the number of tests should be about 100,000 per day, if we compare with India or the USA.  

At a time when our neighbour India has set a new global record with the daily infection rate crossing  90,000, Bangladesh is letting its guard down in many ways. Most people have lost faith in testing.

The minimum charge imposed by the government is also discouraging poor people from taking tests. Most of the coronavirus positive patients have chosen to get treatment at home due to lack of trust and quality of hospital services.

Even in serious cases families avoid hospitals and opt for using oxygen cylinders at home.

On the surface, economic activities have started returning to normalcy. Silently, the virus is also spreading. As the number of cases is surging in India--including in neighboring West Bengal, Assam and Tripura--there is no reason to believe that it is rapidly declining in Bangladesh. We simply either do not know the real situation or we do not want to know what exactly is happening.

The government too seems less bothered about the current Covid-19 situation--as reflected in the Health Minister's statement that Corona is going out of Bangladesh and we will soon be Corona free.

Though distant, vaccines remain the only hope for now. The government needs to make sure maximum coverage for the population as soon as vaccines are available.

People in general, mostly those living in rural areas, are historically indifferent to vaccination. Vigorous motivational efforts will be needed to ensure vaccination of at least 60-70 percent of the population. Otherwise, all efforts to contain the deadly virus may fall flat.

That means we will need to properly vaccinate at least 100 million to 112 million persons across Bangladesh for effective containment of Covid-19. Since every person may require two shots, the actual number of shots will be 220-225 million.  

Securing, preserving and transporting those at the recommended temperature will be a massive undertaking. The government must develop an integrated cold chain without delay and keep it ready for use whenever Bangladesh gets access to vaccines in large quantities.

The government took time in deciding vaccine trials to be done in Bangladesh, while many other countries are well ahead of us in the race by conducting large scale tests. We must not fail again in the game of acquiring and building the infrastructure for distribution.

On the economic front, exports, particularly readymade garment, has seen some turnaround. It has initially been from restoration of old orders which were cancelled or postponed earlier by the  US and European buyers.

According to BGMEA, orders worth about $3.7 billion were postponed, cancelled or delayed. Those are now returning and factories might be busy with old orders until September.

New orders are also coming but the magnitude is not clearly established and sustainability is still a matter of concern as Europe may again enter into a second wave of infection like the USA.

Vaccines are likely to be ready for use in the US and Europe by the end of this year. Still, most projections indicate that these economies may not go back to the pre-pandemic state before the end of 2021.

Domestic economic activities have resumed in Bangladesh, but goods are not changing hands yet at a desired pace. Shops are happy to see a few customers a day in place of 50-100 per day they used to handle in normal times. A rickshaw-puller is getting Tk 400-500 a day, less than a half of his usual daily earning.

Still he finds it better than having no earning like that during the shutdown. It will take until the middle of next year for the businesses to regain their usual pace.

We may still recover faster than the Westerners, because we have to. Low income workers have no choice but to forget about Covid-19.

Some sectors are still having a tough time. Real estate, tourism, transportation, airlines, restaurants and hotels are struggling to get back in business. Distribution of goods and packages has improved, though cottage, small and medium enterprises (CSMEs) are lagging behind. They have not got much support yet from the much needed stimulus package.

Large industries and export sectors are getting access to credit under the stimulus package. However, for all sectors, the stipulated one-year repayment period will be extremely burdensome.

Businesses ravaged by the pandemic and shutdown will not be in a position to rebound and pay back the loan in a year. They should be given a longer time to recoup losses and regain strength to pay back.

Consumers are also not spending much. They are recovering from shocks--- physical, psychological and financial=-and are now extra-cautious about spending than any time before.

They are focusing more on repaying personal debts and keeping some money aside to meet emergencies. The economy will not get its normal pace back until consumer spending returns to normalcy. The outlook for investment is even worse and will take longer to regain its old pace.

The government should have enhanced cash-transfers under temporary social safety-net programmes for the unemployed workers and their families who lost their incomes. Urban poor are always left out of such programmes.

They need protection too. Urban poor and low-income households saw the biggest erosion in income and they should be incorporated under some sort of safety-net programme. That will help restore household demand, which is key to boosting aggregate demand.

Ahsan H Mansur is the executive director of Policy Research Institute and chairman of Brac Bank