Intelligence Unit said that Bangladesh’s gross domestic product growth would slow down to 3.5 per cent in the current fiscal year due to the coronavirus impact.
It made the projection in its article ‘South Asia shows vulnerability to the coronavirus pandemic’ released on March 27.
The EIU said that preventive measures to stem the spread of the outbreak were set to exact a heavy economic toll as the coronavirus pandemic was expected to substantially dampen economic growth.
Preventive measures taken by governments to curtail the movement of people will lead to a demand-side shock to private consumption — the primary driver of economic growth in many South Asian economies, including Bangladesh, it said.
The closure of factories and businesses would result in a supply-side shock and the subsequent layoffs will exacerbate the demand shock, added the EIU.
In the national budget for the current fiscal year 2019–20, announced in June 2019, the government had targeted achieving the GDP growth at 8.2 per cent for the fiscal year.
On March 31 this year, at an emergency meeting a with Bangladesh Bank governor Fazle Kabir and secretaries of the Finance Division, Internal Resources Division, Economic Relations Division and Bank and Financial Institutions Division, finance minister AHM Mustafa Kamal said that the country’s economy would face adverse impacts due to the global outbreak of the virus.
But he did not provide any specific estimates.
The Asian Development Bank has projected that the Bangladesh economy might lose 1.10 per cent of its GDP, or $3.02 billion, in addition to 8.95 lakh job losses due to the coronavirus pandemic.
In its article, the EIU said that the Bangladesh Bank and the government were providing stimulus in the face of the economic costs of the pandemic.
However, the measures would not come close to offsetting the loss of economic activities, it said.
The EIU noted that monetary policy stimuli in the Soutn Asian countries, including Bangladesh, would be constrained as the authorities would try to limit the depreciation of their currencies and the strain on their external accounts.