ADB cuts growth projection for second wave
The Asian Development Bank (ADB) has downsized its projection about the Bangladesh's GDP growth in today's fiscal year of 2020-21, taking into consideration the second wave of Covid pandemic and fresh lockdown that restricted monetary activities.
The ADB in its total annual flagship publication titled 'Asian Development Outlook (ADO) 2021' released yesterday had projected that Bangladesh's GDP growth would pick up to 6.8 % in 2020-21 with stimulus package implementation and recovery in global growth and trade.
However, ADB Country Director Manmohan Parkash in a virtual press briefing on the launch of the flagship report yesterday said, "As the second wave of Covid-19 is ongoing and the situation continues to be fluid, these impacts weren't considered inside our outlook."
"These impacts may shave off at least one percentage point from our current projection…it could be in the number of 5.5 to 6 %, which can be quite enviable in the circumstances," he said.
The economy was showing signs of recovery with higher remittances, exports and other indicators, however the recent surge of the pandemic and lockdown will probably trim the growth projection, he said.
The existing outlook was predicated on data prior to March, he said.
In line with the ADB outlook, Bangladesh's GDP growth in fiscal 2021-22 is expected to edge up further to 7.2 % as both exports and imports were picking right up under sustained global recovery.
The federal government also on Sunday for another time revised down the GDP growth forecast to 6.1 per cent for FY21, reflecting the devastating impacts of the next wave of the coronavirus pandemic on the battered economy.
It had initially geared to achieve an 8.2 % expansion of the gross domestic production (GDP) in the current fiscal year and later the prospective was reset at 7.4 %.
Earlier in March, World Bank projected that Bangladesh's GDP might grow as high as 5.6 % in FY21.
International Monetary Fund (IMF) in its latest World Economic Outlook on April 6 forecast that the united states would achieve a GDP growth of 5 % in FY21.
"We are now exceptional second wave of the pandemic with increased number of infections and deaths. The healthcare system has been stretched again to its limit," said Parkash.
Mentioning that the federal government has imposed a lockdown and travel restrictions to control the spread of infections, he said these necessary measures would save lives but have resulted in a disruption in economical activities that could adversely affect livelihoods and slow down economic recovery.
A potential slowdown in vaccination because of supply related issues may further exacerbate the already adverse situation, said Parkash, adding that the impact of the next wave in countries exports were destined for could also undermine economic recovery.
The Asian Development Outlook (ADO) 2021 stated a continued strong remittance inflow was likely to support domestic demand with growth in private consumption.
Pointing out that a move towards universal healthcare is critical to make sure inclusive and sustainable development, the ADO said healthcare in Bangladesh could improve with an increase of public funding and effective administration.
A contributory public social medical health insurance scheme may help achieve universal healthcare, it opined.
The ADB country director said the ongoing pandemic was an possibility to undertake further reforms in social protection and the healthcare sector, bettering competitiveness of the private sector, reducing cost of doing business, diversifying exports and developing skills.
Expanding social safety nets, boosting investments, creating employment, ensuring mass vaccination and bettering the healthcare sector are critical actions for reaching the Eighth Five Year Plan goals, he opined.
He said the financially insolvent and vulnerable persons were impacted the most through the pandemic.
Mentioning that 85 % of the country's employment is in the informal sector, Parkash said livelihoods of the persons have largely been damaged through the ongoing lockdown.
He stressed on the necessity for programmes that could support these persons with access to finance, which would give a sort of immediate relief regarding cash support.
"Short-term unemployment increase and poverty rates will rise, but the challenge is how quickly we are able to bring them back again to normalcy...And for that people have to take certain affirmative actions," he said.
"…we have to skill people, we must provide them livelihood opportunities, we need to provide them quick access to finance…"
"…and we also need to make certain that we will be able to create a specific environment where these persons are brought back with their normal livelihood opportunities," he said.
The ADB has recently provided $650 million in loans and $7.23 million in grants to Bangladesh for managing socio-economic impacts of the Covid-19 pandemic and supporting quick recovery, said a news release.
The ADB can be processing two programme loans of $500 million each and a $940 million loan for the government's Covid-19 vaccination programe.
For 2021-2023, the ADB has programmed $5.9 billion firm and $5.2 billion standby project assistance for Bangladesh, it stated.
FINANCE MINISTER'S REMARK
Regarding the ADB's revised projection, Finance Minister AHM Mustafa Kamal said, "Their forecasts tend to be near to our actual attainment."
"Though our expectation is to attain more growth, if we can achieve as they (ADB) have projected that will be a good achievement," he said.
"If we can achieve according to their projection, then we are on top of all in the South Asia and Southeast Asia," he said in a virtual briefing following a meeting of cabinet committee on purchase.
Mentioning that the federal government has projected a little more growth, the minister said it cannot be fixed before fiscal ends.
Their (ADB) projection about the country's growth is however higher in comparison to what wasstated for other countries, he said.