One of the major impacts of the Covid-19 pandemic on the countries in the Bay of Bengal region is a surge in debt burden, economists told a dialogue on Thursday.
Countries like Bangladesh, India, Sri Lanka and Singapore experience increased debt burden during the pandemic, said Dr Debapriya Bhattacharya, Distinguished Fellow of the Centre for Policy Dialogue.
He was addressing the concluding session of the dialogue styled "The post-Covid challenges in the Bay of Bengal region' hosted virtually.
The South Asian Network on Economic Modeling (SANEM) in collaboration with some regional think tanks organised the event that ended the same day.
Dr Bhattacharya said the issue of debt burden was much discussed while dealing with the affairs of African countries, but this emerged as a key challenge for South Asian countries.
Pointing to the China-led Belt and Road initiative and the US-led Indo-Pacific Strategy, he said geopolitics in the coming days will determine international development aid rather than standard policies.
The bigger economies of the region have done well in tackling the economic fallout as they allocated more resources in this regard, added the noted economist.
Smaller economies will have lesser resilience in fighting the Covid fallout, whereas economic turnaround will be better in bigger economies, he observed.
The countries have experienced investment shock more than consumption shock, Dr Bhattacharya went on to say.
Explaining the reason, he said fiscal and monetary measures like stimulus packages taken by governments provide a bit of cushion to consumption shock, not to investment shock.
This issue should be seriously considered while formulating the recovery strategy, he suggested.
Dr Bhattacharya pointed out that remittance would be one of the wild cards for economic recoveries of the regional countries.
Economist Dr Nagesh Kumar of India, who moderated the discussion, said the pandemic caught the region unawares and it got it with very poor preparedness.
Economic disparity has risen significantly due to the pandemic, he mentioned.
The quick rebound in stock markets in the region is a reflection that wealthier people have surplus money to invest there, Dr Kumar stated.
The lockdown imposed by countries derailed the routine economic activity impacting key sectors like tourism, affecting global trade and remittance, he said.
Prof Amita Batra of the Centre for South Asian Studies at Jawharlal Nehru University talked about the impact on the informal sector and the gender issue.
The people employed in the informal sector were highly affected as it hit migrant workers, she said.
Similarly, more women are unemployed than men as the sectors which employ women were badly hit by the pandemic, Prof Batra explained.
In the concluding session, SANEM executive director Salim Raihan noted that the recommendations put forward by eminent panellists would ensure a better understanding for policymakers about the post-Covid economic challenges.
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