In Bangladesh, 20.4% of the population will fall into poverty pushing the overall poverty rate to 40.9% due to the outbreak of coronavirus, which has negatively impacted people's income abilities, research says.
South Asian Network on Economic Modeling (SANEM) conducted the research to assess the poverty impacts of the Covid-19 Pandemic in Bangladesh, released on Friday.
Using the latest Household Income and Expenditure Survey (HIES) data of Bangladesh Bureau of Statistics (BBS), the researchers of SANEM have run simulations which reveal that with a negative income shock of 25%, the overall poverty rate will be 40.9%, which means another 20.4% population will newly fall into poverty.
In addition to 34 million existing poor (BBS), there are another 36 million people who are “non-poor” but can be categorized as the vulnerable population, said the think-tank.
As per key findings of the research, poverty impact of any income shock can differ depending on the people engaged in various economic activities.
Simulation results suggest that most of the newly poor in Bangladesh will be concentrated in economic activities like crop, animal, and fishing production (43%). Also, different manufacturing activities such as RMG (16%), retail trade (11%), transport activities (10%), and construction activities (7%).
Given that the majority of these people are employed in the informal sector, any employment shock, as in Covid-19, is feared to have severe implications to the overall level of poverty of the country, it added.
According to research findings, 40 districts will experience a rise in the percentage of poverty more than the national average, whereas an additional 30.9% people falling into poverty, the highest.
In a similar fashion, other major affected districts with higher percentages than the national average of 20.4% of additional people falling into poverty would be Mymensingh (30.2%), Sunamganj (28.7%), Cox’s Bazar (27.5%), Nilphamari (27.2%), Narail (27.1%), Chittagong (26.9%), Netrokona (25.9%), Chuadanga (25.8%), Sherpur (25.6%), Barguna (25.5%), and Shariatpur (25.3%).
The estimated impact is found to be lower for Dhaka, Narayanganj, Gazipur, Munshiganj, Brahmanbaria, and Narsingdi.
However, since the initial hotbeds of infections are concentrated in many of these areas with a high density of population, in reality, fall in income of households in these regions can be much higher than our assumption of 25% income shock, said the researchers.
Also, a higher concentration of small-scale trading activities, which can be heavily hit by the lockdown, may result in much more depressing impacts than the aforementioned estimations.
The think-tank welcomed the government's stimulus packages to fight Covid-19. But it opined that the success of these initiatives depends on three factors:
Effectively identifying the vulnerable people and thereby determining the nature and duration of support.
Ensuring that the genuinely affected industries and the poor and vulnerable people receive support.
Lastly, introducing a Monitoring and Evaluation (M&E) mechanism to ensure efficiency, transparency, and accountability in the distribution mechanism.