Covid-19 ravaged economies all over the world and did not spare Bangladesh from its onslaughts too. Different sectors suffered 13-30% losses because of the pandemic. There might not have been any way out to avoid damages in Bangladesh.
The biggest losses to our economy have been in domestic demand-driven sectors and that is because of lockdowns and health risks.
Because of a series of lockdowns, many people have lost their jobs, many suffered salary erosion, while many experienced a pay pause. After losing jobs with good pays, many have been forced to rejoin work at lower salaries as well.
The industrial sector has felt the pinch as all these people have lost their purchasing capacity.
When it came to the supply side of the economy, there were not many problems. It was all about demand that fell in the wake of people's declining purchasing power. To keep the demand side right, it is necessary to take strong initiatives to protect the poor people, especially those who have gone broke after losing their livelihood.
The extent of our internal business has shrunk, so has the demand for products. Employment has decreased, while poverty has marked an uptick.
Covdi-19 infections and deaths dropped because of last year's shutdown. But this year, the rates of infections and deaths are increasing even amid the lockdown. The government is set to lift the lockdown amid an alarming surge in infections.
The announcement of the lockdown on the eve of the second wave of Covid-19 was logical. But, not being able to implement the lockdown in a proper way is undoubtedly a major failure. Both people and implementing agencies are equally responsible for it.
Many have come out of home during the lockdown unnecessarily. Lockdown is a collective process. It is not possible for the government alone to implement it.
Such an ineffective lockdown does not reduce health risks, but it does hurt the economy. Had economic activities been allowed to reopen without continuing such an ineffective lockdown, the amount of losses might have been less and the country's economy would not have collapsed.
It is true that a large part of our population lives from hand to mouth. They do not have the power to afford food expenses in a lockdown. The government also does not have the capacity to provide three meals a day to the poor.
In the midst of all those, it would be reasonable to continue the lockdown only if it was effective until vaccination reaches an acceptable level.
Now, it is a matter of hope that our immunisation activities have begun. We expect to complete the vaccination drive successfully. When 60-70% of the population is vaccinated, especially in economic centres like Dhaka and Chattogram, these places will be 100% economically active.
Our industries, including medium ones, have suffered the most. Most entrepreneurs in these sectors are out of banking services. It is necessary to identify them, bring them under the stimulus packages and help them with financial support.
Big businesses will be able to continue their operations in the future by overcoming pandemic-induced losses. But, many informal sector entrepreneurs have gone broke after losing capital and savings. It is also difficult to identify them as there is no list. That is why we are repeatedly advising to create a database of small entrepreneurs.
In a nutshell, the sooner we can finish vaccination, the faster the economy will resume. At present, it will not be logical to open the economy with extreme risk in the health system.
Abul Kasem Khan shared his views in a telephonic interview with The Business Standard.
Abul Kasem Khan is the chairperson of the trustee board of Business Initiative Leading Development (BUILD)