2-3% growth will be an achievement, says economist Zahid Hussain
The International Monetary Fund (IMF) has projected the country’s gross domestic product (GDP) growth would go down to 2% in this fiscal year as a consequence of the global coronavirus pandemic.
IMF made the projection in its ‘World Economic Outlook,’ released on its website yesterday.
Among other South Asian countries, IMF also slashed India's growth estimate for this year from 5.8% to 1.9%, and estimated the country would make a 7.4% growth in FY 2021, while Pakistan's growth figures were -1.5% and 2% for 2020 and 2021, respectively.
In October last year, the IMF projected a 7.4% growth for Bangladesh for the current fiscal year.
On Sunday, the World Bank also forecast a grim picture for the economy, saying the country’s economic output would come down to 2-3% in the current fiscal year due to the coronavirus outbreak.
The latest IMF report said the Covid-19 pandemic was inflicting high and rising human costs worldwide, and the necessary protection measures were severely affecting economic activity.
As a result of the pandemic, the IMF said the global economy would contract sharply by 3% in 2020, much worse than the 2008–09 global financial crisis.
“Flattening the spread of Covid-19 using lockdowns allows health systems to cope with the disease, which then permits a resumption of economic activity. In this sense, there is no trade-off between saving lives and saving livelihoods,” Chief Economist of IMF, Gita Gopinath, said.
The cumulative loss to global GDP over 2020 and 2021 from the coronavirus crisis would be around $9 trillion, greater than the economies of Japan and Germany combined, added Gopinath.
The per capita income was also projected to shrink for over 170 countries, including Bangladesh.
The IMF also projected that imports in emerging economies might contract by 8.2%, and in advanced economies by 11.5% in this fiscal year.
Similarly, exports from emerging economies would shrink by 9.6% as compared to 12.8% in advanced economies, it further predicted.
Gopinath said the pandemic might not recede in the second half of this year, leading to longer durations of containment, worsening financial conditions, and further breakdowns of global supply chains.
The global economy was projected to grow by 5.8% in 2021 with the normalization of economic activities helped by policy support, said the multilateral lending agency in its Outlook.
Effective policies were essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives was an important investment in long term human and economic health, IMF said in the outlook.
Asked about the projection of the IMF, Planning Minister M A Mannan told the Dhaka Tribune: “The World Bank and the International Monetary Fund (IMF) made their GDP projections based on their research work. But, I don’t think the growth will be this much lower.”
He, however, said there was no doubt GDP growth would be less compared to the previous year.
For the current fiscal year, the government had set a target of attaining a GDP of 8.19%, while in the last fiscal year the economy achieved an 8.15% expansion.
Former World Bank Lead Economist of the Dhaka office, Zahid Hussain, said amid the global volatility and negativity, attaining 2% to 3% GDP growth would be an achievement for the country.
As of February and before the outbreak of the coronavirus, most of the economic indicators and growth rates except remittances were not in good shape. Rather, they were in a downward trend, added Zahid.
Besides, private investment and consumer expenditure were also trending downwards, while the companies listed with the Dhaka Exchange (DSE) showed negative growth in sales and in their financial statements, said the economist.
On top of this, the outbreak of coronavirus would make it impossible for all sectors to come out of the catastrophe, added Zahid.