Pandemic reversing poverty cut: WB | The Daily Star
12:00 AM, April 13, 2021 / LAST MODIFIED: 12:14 AM, April 13, 2021

Pandemic reversing poverty cut: WB

Govt responding proactively but implementation challenges remain

The Covid-19 pandemic has reversed Bangladesh's steady trend of poverty reduction which had continued over the past two decades, according to a new report of the World Bank.

It also said 30 percent of the country's population was below the poverty line.

The WB report said the government responded to the economic shock from the pandemic proactively, announcing a Covid-19 response programme of $14.6 billion, but there remained implementation challenges, particularly in bringing resources to small businesses and poor households.

The report, titled "Bangladesh Development Update-Moving Forward: Connectivity and Logistics to Strengthen Competitiveness," was launched through a virtual media briefing yesterday.

According to the government's data, the country's poverty rate stood at 21.8 percent in December 2019.

The Washington-based global lender in the report said despite being severely affected by the Covid-19 pandemic, the economy started seeing signs of gradual recovery in the first half of fiscal 2020-21 as mobility returned to pre-pandemic levels, factories reopened, and exports rebounded.

Consequently, the GDP growth was projected to reach 3.6 percent in this fiscal year, led by recovery in manufacturing on the back of strong export demand, rebound in construction supported by accelerating public investment, and robust services growth, thanks to progress in the vaccination campaign, it said.

Citing its recent phone-based surveys, the WB said there was a gradual recovery of livelihoods and the labour market in Dhaka and Chattogram in the first half of this fiscal year.

With gradual restoration of livelihoods, food security in poor and slum areas improved. In Chattogram, the percentage of adults working seemed to have returned to pre-Covid levels in February 2021, it said.

Yet, the report, which was being written at the time when the risk of a Covid-19 resurgence remained, indicated that the emergence of new infections would pose many challenges.

The persistence of new infections suggests that transmission of the virus remains an ongoing challenge, it said.

"We have some new information about additional infections and lockdowns but it is still very early. It is hard to know how long that would go on," said Bernard Haven, senior economist of WB, and co-author of the report, during the virtual lunch of the report.

He said the calibration of stimulus programmes will need to be dynamic and flexible in order to respond to the changing condition on the ground.

"One of the things that need to be kept in mind at this stage of the pandemic is that smaller firms and poor individuals also have access to much needed stimulus programmes and resources at the same time the larger firms are supported," Bernard said.

COVID-19 IMPACT

The WB report said the pandemic severely impacted jobs and earnings and caused poverty to rise in the fiscal 2019-20.

The GDP growth decelerated sharply, down to an estimated 2.4 percent in the fiscal 2019-20. Industrial growth slowed, with a sharp decline in readymade garment (RMG) manufacturing output, it said.

Citing a nationwide phone-based survey conducted from September to November last year, it said that almost one in five economically active individuals experienced either a job loss (5 percent) or a prolonged absence from work (14 percent) since the onset of the Covid-19 crisis.

Among the latter, the average duration of unemployment was three months, it said, adding that among those employed at the time of the survey, 51 percent reported a loss in earnings or wages.

However, the WB in the subsequent surveys conducted between June 2020 and February 2021 on the households living in poor and slum areas in Dhaka and Chattogram cities found a gradual labour market recovery in major cities by February this year.

The survey found that the percentage of adult workers increased from 50 to 66 percent between June 2020 and February 2021.

In June and July last year, 50 percent of households reported that at least one member had eaten smaller or fewer meals in the preceding two weeks. In September and October, this share fell to 23 percent, the WB found.

There were also improvements in households' ability to pay rent and expectations to be able to obtain cash to fund an emergency, it added.

CHALLENGES

The WB report said, "Protecting households affected by the negative effects of Covid-19 remains an urgent priority."

It said in a nationwide monitoring survey, carried out this February, a fifth of the respondents reported having no sources of help to turn to if faced with a future emergency expenditure.

Another 7 percent said they would have to mortgage or sell assets, the report said, adding only 14.3 percent and 32.5 percent of the respondents said they could rely on own savings and borrow from friends or relatives respectively.

The World Bank suggested building a data infrastructure to track the impacts of future shocks on households and firms can help inform the policy response to future crises, strengthening resilience.

Speaking at the launching ceremony, Mercy Miyang Tembon, World Bank country director for Bangladesh and Bhutan, said despite the uncertainty created by Covid-19, the outlook for Bangladesh's economy is positive.

"Much of the pace of recovery will depend on how fast mass vaccination can be achieved," Mercy said. "The World Bank will support a resilient recovery, helping Bangladesh achieve green, smart, and inclusive growth." 

 

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