Globalization has brought great benefits to Bangladesh’s apparel industry as international fashion companies farm out production to cost-effective centers for manufacturing, and by carefully orchestrating a supply chain that spans multiple countries, are still able to deliver products at stores, in time. Covid-19, however, has exposed the vulnerability of these cross-country supply chains, initially with negative consequences for Bangladesh. But the situation is seen as fast improving.
The potential negative impact on Bangladesh’s economy due to Covid-19 however depends on the duration of the crisis. There is a limited possibility, following lockdowns around the world, that infections may return in subsequent wave(s), even if in limited numbers, which may continue to have economic impacts. There are also expert who argue that a potential global recession will fade out by Q4 (fourth quarter) of 2021.
The International Monetary Fund(IMF) thinks that the recession will be worse, but more short-lived than the global financial crisis of 2008. The duration matters greatly for Bangladesh, because its economic fate is closely tied to the fate of countries that enable the two R’s that drive it: ready-made garments (RMG) and remittance.
Ready-made Garments (RMG) companies that buy from Bangladesh literally closed doors all over European and American cities. But stores representing H&M, GAP, Zara, Marks & Spencer, Primark, which are all major buyers, are gradually opening. The international credit rating agency, Moody, expected that the RMG sector in Bangladesh would fully recover by the end of the present year as demand recovers and supply chain shocks are overcome.
It seems a lot of businesses now want to move investments out of China, and Bangladesh definitely stands a good chance to get additional orders said a contact at Intimate Apparels. Intimate Apparels is a leading brassieres and lingerie manufacturer with facilities in Bangladesh, with a production capacity of 2.5 million pieces a month and over 3,200 workers and staff. The company is the preferred supplier to leading global brands including C& AFTL, Wonderbra, Next, Carrefour and JCPenney. Another contact at Plummy Fashions Limited also agreed that multiple-shoring is a strong possibility post the pandemic.
And if that happens, it might augur well for Bangladesh. After all, it is next only to China in terms of apparel manufacturing and exports globally. China losing out a part of its business is definitely an opportunity for Bangladesh, claimed CEO of a renowned sourcing brand in Bangladesh. He believes Bangladesh is in for decent orders and good business from January onwards. Meanwhile, the other pillar of the Bangladesh economy – remittances sent by migrant workers – will also experience some significant benefits after taking a hit in our traditional manpower importing countries. Some prompt measures taken by our government to create incentives for remitters haver created splendid results. Remittance figures have shot up magically in the last six months and seems likely to continue apace. When thousands of Bangladeshi migrant workers are being sent back from countries around the world amid the Covid-19 pandemic, the government has come up with a piece of good news. “Some African countries have shown interest in recruiting around 40 lakh Bangladeshis in the agriculture sector,” Foreign Minister Dr AK Abdul Momensaid recently.”Sudan, Uganda, Tanzania, and The Gambia want to recruit 40 lakh ( 4 million) workers for agricultural work. Our ambassadors are working on it. “This has created an opportunity for us amid the difficult times of Covid-19,” the minister said.
It was reported very recently that the Malaysian government has opened its doors to workers–skilled and unskilled-from Bangladesh on a large scale. Needless to say, this is a very encouraging development. Large scale recruitment for sending to that country has already started.
While the government is trying to persuade the Middle Eastern countries not to send Bangladeshi workers back, the new labor market in Africa can be a big window of employment opportunity for many Bangladeshis. Baira Secretary General Noman said, “We can explore the African migration destinations in the post-covid-19 period. “Also, there will be many job opportunities, around the world, in the health sector in the postCovid-19 period. We can send our young workforce, which is big in number, to new destinations including Africa and Europe.
At times of economic turmoil, small businesses and startups are usually the worst hit. Raising funds is difficult as it is, for small businesses and startups. The silver lining in this economic scenario is that the Bangladesh government has come out strongly and in a timely manner announcing multisectoral stimulus packages that will shore up RMG businesses, provide direct incentives to workers, buttress the banking system, ensure liquidity in the economy, enable reprieve to exporters and importers, and provide support to other impacted sectors such as tourism, aviation, and hospitality.
In the long run, Covid-19 will have exposed areas for improvement in our health care system, IT infrastructure, workplace cultures, and adaptability of our public and private sector leadership. The virus may also have the unintended consequence of enhancing our social protection and emergency response capacity. It may also push us further along the digital transformation curve. This is a curve we do not wish to flatten, but only steepen.
Given the Bangladesh government’s commitment to speedy and well-considered stimulus packages, speedy monetary and fiscal interventions and not to mention its large informal economy, there is every possibility that the Bangladesh economy is very likely to fully rebound by the second half of 2022.
