DHAKA, Aug 20, 2020 (BSS) – International Chamber of Commerce, Bangladesh (ICCB) has urged the authorities concerned to save micro, small and medium enterprises (MSMEs) in order to maintain sustainable growth and keep the supply chains functional and cost effective.
“Like most other emerging economies, Bangladesh has to tackle a number of key issues in order to achieve the desired GDP growth which include healthcare, sustainable export, FDI and remittance flow. Besides, in order to maintain sustainable growth and order and to keep the supply chains functional and cost effective, it is very important to save MSMEs,” according to ICC Bangladesh quarterly News Bulletin (April-June 2020) published today.
In the news bulletin, ICCB said, Bangladesh economy grew by 5.24 per cent in FY20 despite the COVID-19 pandemic against 2 per cent growth forecast by World Bank and IMF. The government has set the GDP growth target for FY21 at 8.2 percent, which under present COVID scenario will be difficult to achieve, it added.
The bulletin said to control the spread of the COVID-19 pandemic, Bangladesh government announced countrywide lockdown from 26 March, making the whole economy virtually a standstill. The shutdown has left a huge number of people unemployed as they are dependent on daily income for their livelihood. According to Bangladesh Institute of Development Studies (BIDS) survey, Bangladesh will have 16.4 million new poor in 2020 due to the impact of pandemic.
The Economist Intelligence Unit forecast on 26 March that the global economy is expected to contract by 2.2 per cent in 2020. This is likely to affect its garment exports to major G-20 countries such as Germany, Italy, the UK and the US. Due to depressed oil prices Middle East and North Africa region will also face lower growth. For these reasons, Bangladesh’s remittance inflow, export earnings, industrial production and services sector are going to be seriously affected, the bulletin said.
However, surprisingly remittance inflow recorded an all-time high of US$ 18.2 billion in FY20 and on the other hand export earnings have registered a sharp decline of nearly 17 percent at $33.67 billion in FY20 due to cancellation and reduced export orders of garments, which accounts for 84 percent of total national exports, it said.
Experts consider that country’s export diversification is urgently needed. At the same time FDI dropped by 14 percent to $3.73 billion in the 11 months of the FY 20.
Prime Minister Sheikh Hasina has announced stimulus packages of Taka 677.5bn (approx. $8bn) planned to implement in immediate, short and long phases through four programs (increasing public expenditure, formulating a stimulus package, widening social safety net coverage and increasing monetary supply). The Prime Minister also announced a number of social safety packages including direct cash assistance for informal sector workers; health insurance for health workers and bankers in case of COVID-19 infected, special honorarium for bankers, health workers and others and cash payment in case of death.
Bangladesh Bank announced moratorium on loan payments until 30 September 2020 and that such borrowers will not be in default. Government announced details of its Taka 50 billion (approx. $595m) stimulus package for export-oriented industries. This includes assistance towards salaries and funding of 2 year loans to factory owners at 2 percent interest.
Therefore, timely implementation and ensuring that the various stimulus packages announced by the Government and the Bangladesh Bank are availed by the most desired will be very crucial, it said.