Assignment on

“COVID-19: How Bangladesh Should Respond

To Economic Threats”

Course Name: Human Resource Management 

Course Code: BTM 4303

Submitted to-
Naznin Akhter
Assistant Professor
Department of Business and Technology Management 
Islamic University of Technology 

Submitted by-
Group Name: EMBOSSED
Saifa Islam Dipty-180061114
Maisha Maliha Morshed-180061120
Intesar Hasan Nahin-180061128
Sabrin Sultana Saba-180061140
Maisha Maliha Mim-180061143
Department of Business & Technology Management 
Islamic University Technology 

Date of Submission-19/04/2020
 COVID-19: How Bangladesh Should Respond To Economic Threats

The economic disruption caused by COVID-19 threatens millions of livelihoods in Bangladesh.

The COVID-19 pandemic, however, is a crisis of a completely different magnitude and one that
will require a response of unprecedented scale. Bangladesh’s leaders in the public and private
sector must come together to respond to the immediate threats to health systems and the
long-term effects to the country’s economy.

The shape of the shock for Bangladesh Economy:

U-shape: Bangladesh had a markedly different path. Growth dropped precipitously and never
rebounded to its pre-crisis path. Note that the growth rate recovered (the slopes are the same),
but the gap between the old and new path remains large, representing a one-off damage to the
economy’s supply side, and indefinitely lost output. This was driven by a deep banking crisis that
disrupted credit intermediation. As the recession dragged on, it did more damage to the labor
supply and productivity.

Economic Threats:
After the coronavirus pandemic, our growing economy may face a tremendous and
unimaginable shock. The on-going problems will intensify because of:

 Liquidity Crisis:
All of a sudden Bangladesh using a big amount of money on the purpose of preventing
COVID-19 such as:

 Buying Stimulus Packages:

While many countries have made good starts in stimulus packages, Bangladesh
has been slower to react. The Prime Minister initially announced an emergency
stimulus package of $600 million (equivalent to 0.2% of GDP) on 25 March,
which on 4 April was enhanced significantly to $8.5 billion (equivalent to 2.5% of
GDP).

 Ensuring Frontline Health:

In order to ensure that frontline healthcare workers have the necessary personal
protective equipment (PPE), the Bangladesh Garment Manufacturers and
Exporters Association (BGMEA) are currently coordinating with five of its
member companies to convert their production lines to produce 500,000 PPEs.
This may cause a huge liquidity crisis within few days.
 Negative Export Position:
Global economic change will hamper Bangladesh's garment sector a lot.

According to the forecast released by the Economist Intelligence Unit on 26 March, the
global economy is expected to contract by -2.2% in 2020. These effects are expected to
be more pronounced in major G20 economies, such as Germany, Italy, the United
Kingdom and the US – all countries that are major markets for Bangladesh’s most vital
tradeable good: readymade garments.

 Food Crisis:
“Uncertainty about food availability can spark a wave of export restrictions, creating a
shortage on the global market,” said the joint text signed by Qu Dongyu, head of the
UN’s Food and Agriculture Organization, Tedros Adhanom Ghebreyesus, director-
general of the World Health Organization and Roberto Azevedo, director of the World
Trade Organization.

The Bangladesh economy might get hit very hard because of the pandemic. Like previous
records, we have had natural disasters (affected 3.7 percent of our GDP) and then been
hit by the double whammy of sharp rise in prices of food commodities (rice, wheat, sugar,
 edible oil, dairy products) and oil. Our economic development has also been severely
hampered through the international price rise.

 Increase of Unemployment:
The implication is that nearly six million workers in Bangladesh’s formal sector – which is
largely manufacturing – will be without steady work for an extended period.

Bangladesh Bureau of Statistics indicates that Bangladesh has more than 50 million
workers in the informal sector. While there will be a significant impact on the livelihood
of workers in the formal economy, there can be no doubt that the informal sector will
be hit even harder.

 Remittance Shortage:
In the coming months, there can be no doubt that there will be a decrease in
remittances and that these second-degree impacts will also be felt in the country,
painfully in rural Bangladesh, where families rely heavily on remittances for their
subsistence.

 The Shutdown of Industries:

As local and state governments issue shelter-in-place orders, asking residents to remain
home for all but essential errands, businesses — especially small local businesses —
across the U.S. are facing difficult decisions.
  Transportation Problems

We know that highly emotional Bangalis sometimes surpass logicality. And most of them are
pious. When their strong belief in the afterlife is combined with their emotional nature –
instead of weakening, it strengthens them.

How Bangladesh Should Response To These Threats:

 Prevent liquidity crisis:
Immediate steps should be taken to increase the liquidity before the huge crisis hits the
market. The economy needs money to be pumped in at any cost.

We need to equally focus on technology and artificial intelligence as the rest of the
world – otherwise, we would lag behind.

The government needs to take some steps now. One of them is to contact funding
organizations like IMF, World Bank, ADB etc. And rich countries for soft loans, aid or FDI.
Tightened policies of Bangladesh bank and BIDA should be flexible so that the fund flow
at marginal interest rates from foreign organizations can be easier and quicker.

These will help in easing the liquidity crisis and develop the inland industries. The
economy now should emphasize on mutual co-operation, not on competition.

 Earning Remittance:
Demand for female and male nurses and trained people in the medical sector will go up
– we can use our educated manpower in this field. But training on health safety issues
and communication will be a necessity in sending people abroad.

 International support:
This crisis requires worldwide communication – we can use the scope to strengthen our
relationships with powerful countries.

By this time, the government has taken initiatives for the stock market. But proper
implementation with other proactive measures has to be ensured. Acute liquidity crisis
among the investors will push down sales after the market reopens, which may induce
another market crash.

We can seek the help of the world's largest and persistent buyers as we always listen to
them. We need to convince them to stand by us in the bad times ahead.
 Holding back Industry Sector:
Small and medium business and industries would need attention and financial support.
It is a must to help them survive and maintain their operational costs. Needless to say,
their contribution towards reaching the millennium development goals is immensely
important for the country.

 Reducing Unemployment:
The government can follow two ways.

 Monetary Policy:
Monetary policy would involve cutting interest rates. Lower rates decrease the
cost of borrowing and encourage people to spend and invest. This increases AD
and should also help to increase GDP and reduce demand deficient
unemployment.
 Fiscal Policy:
Fiscal policy can decrease unemployment by helping to increase aggregate
demand and the rate of economic growth. The government will need to pursue
expansionary fiscal policy; this involves cutting taxes and increasing government
spending. Lower taxes increase disposable income (e.g. VAT cut to 15% in 2008)
and therefore help to increase consumption, leading to higher aggregate
demand (AD).
  Public-Private Cooperation Will be Key:

By taking early steps on the health security side, Bangladesh has been able to buy itself
some time to respond to this pandemic. But the country cannot afford to be blind-sided
by the secondary economic risks associated with this crisis.

The fight against COVID-19 cannot be carried out by the government alone. It will
require an unprecedented level of coordination between the public and private at the
local and international level. The World Economic Forum, with a mandate from the
World Health Organization, has launched the COVID Action Platform in response to the
pandemic. Bangladesh should look to tap into this platform to galvanize support for its
private sector and share some of its own experience in fighting COVID-19 and increasing
its economic resilience.

Conclusion:
An economic hit from the COVID-19 pandemic is inevitable for Bangladesh, as its key
global trading chains continue to get disrupted. However, the health and financial
fallout on Bangladesh’s lower-income population may be much higher, unless the
government takes swift preemptive measures to trace and curb the spread, and provide
financial cushion to the affected. Otherwise, the virus stands to undo the substantial
progress the government has made over the last decade.