Economic woes to linger

BANGLADESH (The Daily Star/ANN) -- Bangladesh’s economy may continue to suffer under the Covid-19 pandemic throughout the current fiscal year due to vaccine shortages and the government’s incapability to enforce a strict lockdown, said a recently released Fitch Solutions report.
It also has revised down its forecast about the country’s GDP growth for fiscal year 2021-22 to 5.5 percent from its previous projection of 6.7 percent.

The implementation of public infrastructure projects like Dhaka metro rail may boost private sector business investment, the Fitch Solutions report says.          --Photo Sk Enamul Huq

“We believe that Bangladesh will continue to struggle to achieve Covid-19 herd immunity via vaccines as a result of vaccine shortage, given its reliance on the COVAX programme for supply,” said the report.
“Moreover, an inability of the government to credibly enforce stringent lockdowns for as long a duration required to stem an ongoing outbreak will likely see pandemic-related reasons weigh on the country’s economic recovery,” it said.
“And prevent a return to pre-pandemic trend growth of 7 to 8 percent over the near term,” said the report titled “Persistent Pandemic Headwinds to Cap Bangladesh’s Economic Recovery Prospects”.   
The report, however, said such a GDP forecast of 5.5 percent reflects its expectation for the country’s economy to still record resilient growth.
The country’s economic activity will also experience less disruption from weak lockdown enforcement, it said. Meanwhile, exports will recover from strong external demand as garment factories remain open amid lockdowns and externally financed public infrastructure investments will drive fixed capital formation growth, it added.
The Covid-19 vaccination campaign has seen low progress since beginning in February, with 3.7 percent of the population getting at least one dose between April and most of July, due to a shortage of vaccines, it said.
The vaccination drive has only begun to accelerate from the end of July following improved vaccine supplies, with 5.4 percent of the population getting at least one dose as of August 1, it said.
Still-low rates of vaccination for Bangladesh will imply elevated contagion risks through FY22, with repeated lockdown implementation likely as the authorities attempt to contain domestic outbreaks, it opined.
Bangladesh is reliant on the international COVAX scheme, and the scheme is reliant on India’s Covid-19 vaccine exports, which India has halted since May to redirect supplies to its domestic vaccination drive, it said. So, there remains the risk of further vaccine shortage down the line posing a bottleneck to Bangladesh’s vaccination drive once again, it stated.
Fitch Solutions in its report highlighted the risk of waves of outbreaks being more frequent and persistent with subsequent lockdown implementations, with the spread of the more contagious Delta variant of the coronavirus.
It, however, said a high tendency for society to circumvent lockdown restrictions and weak government enforcement of lockdown regulations will blunt the immediate economic shock from lockdowns.
European and North American economies are being strong supported by rapid vaccination progress and fiscal and monetary stimulus, it said.

(Latest Update August 10, 2021)