Decades have gone by, and the challenge of many kinds has arisen. The world is now on a tipping point, a place where the domain of evaluation has caused a degree of mistrust between the nations of the world.
Starting now, we are faced with one of the most impactful situations which have spread around the globe like a plague, a disease which knows no bound and measures, which knows no ethnicity, race, color, and age. The Pandemic of COVID-19 has left the human race speechless, in an account to try to contain and curb such a situation, governments around the world are truly making it hard for the normal citizen to comply with regulatory mechanisms, both economic, financial and at the utmost personal.
For this era of Pandemic, the decentralization of most of the world economy has put the lives of millions of people at risk. What will happen to the people is left to destiny, but there can be measures taken in compliance with the furtiveness of the mind to generate ideas to limit the havoc, which is slowly turning this Pandemic into one of the worse cases of helplessness among the entire human race. The forecast measures for COVID-19 will help the entirety with which the world moves forward but will be enough to save millions of lives. The answer remains in the realm between doubt and the manifestation of our eagerness to uphold the truth about our lives.
To prevent public distress and eventual genocide all across the globe, we as citizens of the world proceed in such a way maintaining guidelines by the health care experts and the governments’ public Medicare departments in fulfilling the way pace of rapid peace is conducted across the nations. However the situation is not lost, with conclusive science and genetic engineering a vaccine is on the way to diminish COVID-19 virus for good and even without the cure by maintaining social distancing, and following the guidelines by experts in the field of virology, this plague can be limited to a level of distinguishable disease. Like Polio, Ebola, the mad cow disease, the Eras have gone by to such an extent that the existence of human beings has flourished all across the regions in all types of situations.
In a gist, the real reasons for Economic poverty and devaluation are central to the work of this paper and how in this era of the Corona pandemic, the world economy is put under recession, especially for Bangladesh and its economic implications are will be discussed in detail.
This paper aims to indicate the economic effects of Pandemic COVID-19 particular emphasis on Bangladesh.
The scope of this writing is to analyses the economic effects of COVID-19 in the world and its effect on the economy of Bangladesh.
Effect of COVID -19 in Economy
The economic organs of a nation provide the country with the ability to protrude itself in sync of globalization marching towards steps of growth. Growth here is the perfect synonym for prosperity as growth develops not from the articulation of artificialness, but it in some way effects the lives of the people who are both the receiver and the contributor to the development of their decree. The mass disease of Coronavirus has put a halt to this, and the negative symptoms have been in a downward spiral, all of it meshing the domestic productivity with international and national investment. Left in a state of abandonment, without proper measures, the result of such evidence seems mutually dim.
Apart from trade and international relations, the mere aspect which exactly reiterates the market economy and mature capitalism introducing socialist and collectivist approaches in times where the decrease in confidence of the private sector reels in state intervention in the form of state grant loan and Stimulus packages. Let us at first look into the biggest factor which indicates the health of the economy, and that is the GDP. The Gross Domestic Product or GDP (Nominal) is one of the main indicators of economic strength and capability. The GDP depends on four factors, namely personal consumption, business investment, government spending, and net exports.GDP is also the countries total economic output for each year. It is equivalent to what’s been spent in that economy. The formula for GDP is Y equals C+I+G+NX, which in literal terms, accounts for consumption, investment, governments, and net exports. A look into these terms and their description will make it easier to understand the GDP and its policy implications of both the public and private sectors. Considering the US economy, personal consumer expenditures computes to over 70 percent of total spending, accounting for more than 13.8 trillion US dollars as of 2019. The BEA (Bureau of economic analysis) suggests that personal consumption can be cumulatively grouped into three categories: One is durable goods like house, cars, and furniture, and the other non-durable, including clothing, food, and fuel.
At last, we have services that include banking, health care, and education. Services in the west contribute to more than 45 percent of the GDP, and since the services can rarely be exported, the service industry, in general, is completely imported. Secondly, business investments involve the purchase of goods and services and the purchasing power involving the buying and selling of goods, but if a particular good replaces other goods, then there is no net change, and the effect is zero or nil. Again the BEA divides the investment into two subcategories: Fixed investment and change in private inventory. For fixed investment, most of it is a nonresidential investment and includes software, capital goods, and manufacturing equipment. The economic indicator is based on the monthly durable goods order report. Commercial real estate is just another part of a nonresidential investment. The change in private inventory means that they already add to the available products when they get the order for the shipments.
The inventory increases when they get more orders, but there aren’t that many products in the inventory. An increase in inventory contributes to the GDP. Then there is government spending, and the spending comes from the balance of tax payer’s money and the monies that are in reserve in the form of commodities and gold. Then considering the net exports of goods and services. Exports add to the economy while imports subtract from the economy. Just by describing these aspects won’t give us a glimpse of what is to come due to the Pandemic of COVID19.
Stagflation is the rise of three negative economic factors, namely the rising inflation, rising unemployment, and the decrease in demand for goods and services. This Pandemic has turned the world upside down and has rendered these three factors immense importance when describing the economic scenario of the world. According to Philips curve, inflation and recession are diametrically opposite forces. Inflation refers to the general increase in the supply of money (Money Stock) that causes the general level of prices to go up. When more money is available to chase the same number of goods, the value of unit money, according to the law of supply and demand, loses some of its value. Not every rice in price can be considered inflation. The main point is there is an overabundance of the money stock, then that’s called inflation. Rise in prices or in consumer demand doesn’t necessarily mean an indication of inflation.
As per the case of unemployment, which defines the percentage of people who are likely to get jobs but are unable to, unemployment in itself is subjected to seasonal and frictional unemployment.
Seasonal unemployment is the natural result of market functioning at a normal pace, while structural unemployment is a result of the government’s involvement directly or indirectly. The recession also means negative growth in two consecutive quarters as measured by gross domestic product. It is also known as economic contraction. The National Bureau of Economic Research (NBER) also states that “It is a period of diminishing activity rather than diminished activity”. Recession is characterized by falling demand for goods and services, declining real wages, a temporary increase in unemployment, and an increase in savings. Coronavirus has halted all of these effects, and pretty soon, the recession can turn in to a depression.
Considering the Bangladesh Economy in the era of COVID-19 Pandemic, the economic shock from declining export policy and travel bans has developed this realistic mirage of economic uncertainty. A few months ago, the entire world was enjoying a period of sustainable growth, recovering from the global financial crisis of 2008-2010 periods, Bangladesh was no exception.
By maintaining a growth rate of above 7 percent for over 8 to ten years, the issue of any sort of financial crisis and policy deregulation was out of the question. But even being the tiger economy of Asia, the Bangladeshi economy couldn’t escape the clutches of the Effects of Coronavirus. The implications are nervously immaculate, and government intervention is required to limit the loss of money from both the public and private sectors. In the initial stage of Coronavirus, economists predicted that it is going to be a “V” shaped recession, from where sharp decline is faced with again a sharp rise as was the case with the Chinese economy but the real power of the COVID-19 virus was still unaccounted for and proved to be more costlier than expected.
The economy of the US, CHINA, GERMANY, JAPAN, and UK are interconnected with most of the world’s economy, and Bangladesh is no exception. These economies constituents of 60 percent of world supplies, 45 percent of manufacturing, and 40 percent of manufacturing export. Due to the Coronavirus and in an attempt to stop this virus spreading through the region, lockdown, curfews, and social distancing have been enforced by governments.
Now, consider how all these affect the economy; first, to get down is through the concept of network economics, where there will be an absence of economic efficiency as branches of private and public sectors are completely shut down. The market power and mature capitalism, which dictates the market economy is some ways functions in a mode of building a mechanism following the models of an economic precursor, which leads to concepts build to tackle the economic recession. Technology and how one uses it seems the most viable option to move forward with because the externalities and the internalities of international and national monies create a pathway for positive aggregate supply and demand. Scarcity, the most viable concept of macroeconomics, becomes the hero of this recession as few people begin to order less and less in the scenario of lockdown. But however, the picture is not so dim; there are also cases from gains from specialization. For example, doctors are put to the test, computer scientists are required to develop software’s to inclusively create a virtual working place or office and many other people from the various professionals are getting tested at what they are good at in time of crisis, and this includes everything in the theory of gains from specialization.
The Global economy is connected with cross border flow of goods, services, people and know-how, finance capital, foreign direct investment, exchange rates, and international banking. Therefore in case of Bangladesh, its clothing and leather industry will experience some difficulty in growth because of the declining economy of the west and the mega projects of the nation like the Metro rail and elevated expressway will come to a halt as the Chinese economy began to feel the economic fervor of COVID-19.
ADB or the Asian Development Bank forecasts that in the worst-case scenario, Bangladesh will lose 3 billion dollars from its economy, and about 9 million jobs will be lost, and causes are pretty evident. Some of the reasons that hinder the economic development of Bangladesh are a direct impact on production, supply chain from market disruption as well as the impact on firms and financial markets. If the banking industry fails due to the international arena’s chain effect, then the SMEs(small and medium-sized enterprises) will also get affected.
The size and diligence of how the government deals with this crisis remain an unanswered question. Strategical situations can win over any sort of looming doom hovering above the economic background. Short-run and long-run policies by the government and state agencies and banks have been applied to limit the continuation of the financial crisis due to the Coronavirus.
The three main points are cohesion, accountability, and leadership in the time of crisis to mitigate fear and panic amongst the normal citizen.
The WHO (World Health Organization) has declared the state of Pandemic, and it will be seen in the future of where the battle between the virus and the human race leads to. Cutting the interest rates and increasing liquidity buffers to firms are temporary measures, but what it leads to is up to fate and our silent hope for a renewed future for which every measure is done.
About The Author
Engr. Samin Shadman Zahir
The writer here in question began writing since his teenage years, beginning with a presentation on astrophysics topic entitled supernova and then going forward to completing his O levels in 2009 and A levels in 2012 successfully. The real research and focus on work began in his university years when he participated in the BDI essay competition entitled: How to improve the socio-economic condition of Bangladesh. He got an honorable mention. After that, another one of his works on climate law got mentioned in another international symposium at Bonn Germany. Now, after having finished his BSc in Mechanical Engineering from MIST, he is working towards his ultimate goal of attaining a master and Ph.D. in the field of science and engineering, his work in university for building an AI to control a smart messing system and his final thesis paper on the topic of performance comparison of fluid in a pulsating heat pipe are few of his works which have proved and garnished appreciation from his peers and teacher. The writer of this paper wishes to continue his endeavor for knowledge, the curiosity for striving for that knowledge, and the pre aptness and insight to look forward with a sense of instinct.