Covid-19 disease that has devastated China, Italy, Spain, USA and other countries, is about to hit many other countries with full force. But the economic damage is already here. The world has seemingly shut down and we must be on the worst economic trajectory in the history. America’s Department of Labor has recorded the highest number of new claims unemployment in past few weeks. The biggest stock market has fallen down. To stop the outbreak, business has been shut down. So how did we get here and what can we expect going forward.
Undoubtedly, the consumer related industries are the badly affected.
How the world economy is getting affected?
Well, the governments of all over the world have ordered to shut business and billions of people to stay at home. So the pandemic has started from China. When COVID-19 had its first outbreak in China, it cause Chinese government to shut down every manufacturing factories, business, shops everything to control the outbreak. China is the world’s largest exporting nation and second largest importing nation and also the highest supplier of goods to more than 100 countries. As there is a slowdown in supply chains, many countries experience slowdown in their sales and revenue. Price of every goods has fallen. As they don’t have any product to sell, then there is no money and when there is no money, there is no revenue. So what happens when a company experiences the drop in sales or revenue. That leads to bankruptcies which will lead to high unemployment and this unemployment rate will lead to less purchases made by consumer and this will lead to less sales lead by businesses. And this cycle is leading towards to the great recession or great depression. The economist say that now the most important question is how the recession is going to be; L-shaped recession or V-shaped recession or U-shaped recession
Who are the worst affected?
As the virus spread, the number of alternative suppliers have become fewer. The consumer’s debt are at higher level. We are definitely going to experience some negative consequences in economy in next 24 months. What we see today is much worse than what we saw long back then as we are experiencing many negative indicators in economy. The two biggest industries- the airlines and the cruise lines are way to bankruptcies. Again, the businesses that involve large gatherings, concerts, comedy shows, the arena workers who expect to have a weekly paycheck, the people who pay their workers hourly, small business like stores, restaurant business may go out of business as everyone is staying at home. Though people are working from home, business are losing productivity. Several countries like USA and Canada have done short time recession like loan programs where the small business can take interest free loan and prevent their business from shutting down from next 6-12 months. But what about the developing countries like ours?
How Bangladesh is going to be affected economically?
China is the largest trade partner of Bangladesh. China is the biggest import partner of Bangladesh. Again, Bangladesh exports raw materials for garments factory, pharmaceuticals, commodity from China. Chinese workers who are engaged in infrastructure related works in Bangladesh, have been confined in their country. Several infrastructure projects, which are being implemented by Chinese construction firms have slowdown due to COVID-19. Economists predict that this outbreak of coronavirus may have serious implications for Bangladesh. it is also predicted that our leather industry may lose USD 15 million and textile industry may lose USD 1 million. Our country can lose in total USD 3.02 billion. The other exporting partners of Bangladesh are Canada, USA and many more European countries. Middle Eastern and South East Asian countries are sources of Bangladesh’s remittances. Thus, Bangladesh is going to be affected by global economy. In this over populated country, unemployment, poverty, starvation are going to be the future for next 24 months approx.
How can this situation be tackled?
For tackling the situation the government as well as policymakers should maintain some steps:
• The government should provide proper medical supports to the poor affected people and migrant workers. Hospitals should be provided with enough staffs, PPE, medicines and other necessary equipment.
• Alternative sources for the raw materials which are imported from china can be provided. The prices may be higher, but these supports should be provided urgently.
• Loans can be given to the businessmen, especially small and medium ones. The pay-back term can be extended considering the situation.
• A small financial plan for small enterprises may be started. The workers should be retained through retraining.
• Less consumption demand will slow down the economy. So, public expenditure should be safe guard.
• The measures that are taken for business and virus affected people, should be monitored properly.
• Finally, we, who have enough to contribute, are requested to contribute.
Which sectors are earning profit?
Amidst all the downtown, some companies are making extra sales like tissue companies. As people all over the world are using cleansing materials, so some companies are making much profits. Again, as people are locked down and asked to quarantine themselves, so internet has become the media of keeping oneself busy and entertained. YouTube is earning profits mainly by promoting advertisements regarding COVID0-19 news and all. People are also able to do freelancing jobs this time and earn money. So ‘work from home’ has become a mean to profits from some sectors also.
Till last month, Bangladesh was the least affected countries by COVID-19. But now it is seen that Bangladesh is going to be the economically worst affected countries. COVID-19 or coronavirus is devastating but failing to control it can be disaster for the world, especially a developing countries like ours. If we don’t become aware of the fact, then we can be seen bankrupt soon. So it is better to get prepared for the upcoming global recession. The government will do its job, but depending on government cannot be a solution to your problem.