Recovery mantras

Yet another growth number came for Bangladesh. This time it is from the International Monetary Fund, projecting a 4.4% growth in the current fiscal year and predicting the prospect of putting India behind in per capita GDP.

Earlier, the World Bank had forecast a 1.6% and the Asian Development Bank a 6.8% growth for Bangladesh this year, while the official estimate remains at 8.2%, ignoring the quizzically changing numbers predicted by global agencies.

Every year, Bangladesh appears to be a unique test case for global agencies to play with growth estimates contesting the official projection. This time, with an unprecedented disaster taking all aback, it is more frequent and estimates are varying widely not for Bangladesh alone, but for countries across the globe.

The global economy has been caught off guard by the biggest ever unsettling shock since World War II. As economies are opening up and recovering to regain their losses on many fronts, huge gaps in performance of the countries are also becoming evident.

Economies in different countries and regions are growing at different paces. While China is projected to see a 10% growth, the US economy will struggle to reach its pre-pandemic stage next year and Europe still will languish below the 2019 levels for some more years.

An explanation of these countries' varied recovery figures of course depends on their different economic structures and their individual responses to the Covid-19 pandemic. In June, the United Bank of Switzerland (UBS) projected a V-shaped rebound for China, while the rest of the global economy will still remain under pressure.

Though the service sector accounts for more than a half of China's economy, manufacturing too makes up a bigger share, making recovery faster-than-expected as China opened factories and restored the global supply chain as soon as it reined in its coronavirus infections.

Stimulus packages to industries and individuals surged global demands that boosted Chinese exports and helped the world's second largest economy reverse the negative trend to positive just in a quarter.

Singapore, though in negative territory still, marked significant improvement in the third quarter compared to the second.

But things are not easy for Europe, which is seeing a second wave of virus infection in the approaching winter and the accompanying flu season, with cities like Paris and Madrid entering into a partial lockdown again.

Lockdown is considered an effective measure to slow the spread of the virus, but it is also a double-edged sword, crippling productions and services and forcing the disappearance of nearly 500 million full-time jobs worldwide. Unprecedented and quick interventions by central banks around the world protected economies from calamitous catastrophes and helped the economies crawl back from pandemic induced crashes.

Though an ascent has begun, the IMF on Tuesday projected that the world economy would contract 4.4% this year.

However, the global lender reckoned that Bangladesh would be among few blessed economies to see absolute growth.

What are the strengths of our economy?

Bangladesh's average 6.5% GDP growth over the past few years was largely driven by ready-to-wear exports, remittances and the agricultural sector. The pandemic delivered a hard blow on exports, which started recovering on the back of faster reopening of factories amid health risks. Remittance inflows and farm outputs remained robust even during the pandemic.

Did favourable demographics with a larger share of the young population help Bangladesh out? Or, did the government's stimulus loans and handouts to the tune of 4% of GDP work?

Both might have worked and some other factors had a role too.

No survey is there. But economic and business activities returned to near normal and informal sector workers, including daily wage earners and small traders, who took the first hit of the pandemic and lost their livings overnight, are now back to work. Though earnings are still far from normal days for most of them.

"Working people might have helped themselves out to earn and survive," says Dr Hossain Zillur Rahman, Executive Chairman of Power and Participation Research Centre (PPRC), as he explains the signs of recovery.

Salons, parlours, coffee shops are open and sales are picking slowly. Online shopping platforms are vibrant. Ridesharing drivers are back on city roads and holiday resorts have reopened, pointing to the start of the service sector recovery.

Informal sector remains a major strength for Bangladesh employing 85% of the total workforce, most of whom returned to work much earlier than others out of their necessity for a living.

The US workers—including self-employed and gig—are covered by unemployment benefits with cash for three to six months.

In Bangladesh, informal sector workers have to help themselves. And they did. They defied the virus fear and returned to work just to support their families, which helped the economy back on the recovery track, said Dr Imran Matin, chief executive of Brac Institute of Governance and Development (BIGD).

A sizable working age population also matters, as pointed out by Andrew Baisley, managing director of Tech in Asia.

The median age is 28 years in Bangladesh, which is 38 years in both USA and China. This means Bangladesh's economy has more malleable workers, which Andrew finds as a driver of optimism, innovation and growth.

Higher GDP growth also makes Bangladesh a good spot for start-ups, he told a virtual business audience on 17 Oct, Saturday.

Like in other economies, the service sector was hit hard by the Covid-19 infection as it limited human contacts. But the micro, small and medium enterprises (MSME) sector has seen a 'huge growth' due to digital platforms and adaption of new technologies that helped them overcome disruptions in supply chains, says Adnan Imtiaz Halim, CEO of Sheba Platform, at the same session.

All these factors helped Bangladesh fare better than many other economies, including its neighbours.

However, Dr Ahsan H Mansur, Executive Director of Policy Research Institute, says GDP growth should not be in talks for now, since the country's economy is unlikely to get back to 2019 levels before the first quarter of the next year.

"We're doing better than some others including India does not mean we're growing. We need to put growth talks on hold for now," says the economist, attributing the economic momentum to people's desperate need to earn.

He rather refers to the alarm bell rung by the prime minister about the second wave of infection and her call to stay prepared. "The PM is right when she warns us about a second wave. She urges austerity and calls for preparedness. We are in both economic and health risks."