GDP growth to crash to 2 to 3pc for dire situation: WB

NEWS DESK 

The World Bank makes a dire forecast on Bangladesh's economic growth and jobs that will worsen inequality, hit hard the poor and the massive informal workforce.

It says the coronavirus is set to bring down Bangladesh's gross domestic product growth from high-flying 8.15 percent last year to just 2 percent this year ending on June 30. The highest growth range is also predicted to be a bleak 3 percent only.

The findings were released today on the WB's twice-a-year-regional update report on South Asian economies.

Before the launching of the report, two senior officials of the WB -- Hartwig Schafer and Hans Timmer -- vice president and chief economist respectively for the South Asia region shared the key findings of their analysis with selected journalists of the region on Friday evening.

The latest South Asia Economic Focus anticipates a sharp economic slump in each of the region's eight countries, caused by halting economic activity, collapsing trade, and greater stress in the financial and banking sectors due to the Covid-19.

India's GDP is forecasted to grow at 1.5-2.8 percent while Pakistan and Sri Lanka in 2 to 3 percent negative. Maldives and Nepal that depend on tourism will be the hardest hit in the region.

The Washington-based global lender said many people could potentially lose their jobs in South Asia, including Bangladesh due to a significant decline in private consumption, which will be less than half that of a year ago.

Lockdowns to prevent the spread of the Covid-19 is also taking an unprecedented toll on the economies of the region, it says.

If the lockdown were to last 2 months, employment would fall in all countries but more severely--by double-digits--if the lockdown were prolonged for 4 months. For example, for every $1 million in foregone demand for affected services sectors in Bangladesh, 125 people will be less employed.

The report says if a lockdown were to impact all non-agricultural sectors uniformly for 2 to 4 months, using the same methodology, employment losses in South Asia would range between 14 to 19 percent of total 2018 employment.

The unprecedented COVID-19 crisis comes with a dire economic outlook. South Asia might well experience its worst economic performance in 40 years, with at least half of the countries falling in a deep recession, the report says. 

The harsh reality of inequality in South Asia is that poor people are more likely to become infected with the coronavirus, as social distancing is difficult to implement for them. They also have less access to health care or even soap, are more likely to have lost their job, and are more vulnerable to spikes in food prices, it reads.