Like most countries in the world, Bangladesh bids farewell to 2020 today (Thursday), a pandemic-devastated year that upended people's normal lifestyle while bringing the country's economic wheel to a skittering halt.
But the incoming year is set to be a better one as the deal on procuring Covid vaccine has triggered hope for the restoration of full social and economic activities, say economists.
Although a broad swath of sectors, particularly hospitality and transportation, felt the heat of the pandemic, the cottage, small and medium industries were hit hardest. Many sectors sliced jobs in the year for the lack of economic activities.
The new coronavirus, originated in the Chinese city of Wuhan in last December, arrived in the country on March 08, which had snowballed into all social and economic sectors. The government had announced general holidays from March 26 to May 31.
As of December 30, the number of infections reached 512,496, with the death toll hitting 7,531.
To combat the onslaught of the lethal pathogen, the government unveiled a mammoth stimulus package in April and so far it has amounted to over Tk. 1.0 trillion.
But the government support to the package is minimal as it is bearing 50 per cent interest on the loans given to the affected industries. The remaining 50 per cent is being borne by the entrepreneurs.
The most-affected cottage, small and medium industry has yet to benefit from the package, despite repeated warnings from the central bank.
The central bank took many effective measures to maintain adequate supply of cash in the money market, even as the fear of higher inflation in the economy in 2020 grew.
The Asian Development Bank has forecast that the economy will expand by 6.8 per cent in 2021, but the inflation rate will stay at 5.5 per cent.
The International Monetary Fund is less optimistic, projecting a moderate growth of 4.4 per cent in the forthcoming year.
In contrast, the government said the GDP growth rate will hit 8.2 per cent in the current fiscal year ending June, despite the poor budget spending.
The country's GDP growth was 5.25 per cent in the past fiscal year ending June as a fallout of COVID-19.
The rate of inflation has remained over 5.0 per cent throughout the year, except for October at a time when it soared to 6.44 per cent (on point-to-point basis).
The Balance of Payment or BoP was at a satisfactory level in 2020 on the back of falling import payments, bolstered by the huge inflow of remittance.
The current account balance stayed positive at $4.1 billion during July-November period, the Bangladesh Bank said.
Import was much less than expected throughout the year, but it picked up in the July-November period to $2.0 billion, down by nearly 9.0 per cent from the same period a year earlier.
On the export front, the economy has suffered since the country first reported its first case as the manufacturing sector was shut due to the general holidays.
The demand for the Bangladesh-made clothing goods was also poor as the importing economies were hit hard by COVID-19.
During July-November, the shipment rose by nearly 1.0 per cent to $15.5 billion, the central bank data showed.
The country's foreign exchange reserve hit an all -time high in 2020. It was approximately $42.6 billion on back of poor import payment and higher remittance inflow.
The private sector investment remained slow in the pandemic as the credit to the sector was just 8.6 per cent in October. Usually, it grows double digits.
The banking sector faced problems relating to shrinking space for investment. Most of the banks were desperate to invest in the risk-free government securities.
Dr Zaid Bakht, former head of research at the Bangladesh Institute of Development Studies (BIDS), told the FE: "The economy will strongly rebound in 2021 provided that the country overcomes the second wave of the COVID-19 successfully."
Dr Bakht, also chairman of the state-owned Agrani Bank, said if the economy bounces back, then the financial sector, especially banking, will be vibrant in 2021.
But Dr Ahsan H Mansur, executive director at the think-tank Policy Research Institute of Bangladesh, struck a downbeat tone, saying the government "did nothing" to tackle the COVID-induced economic disruptions.
It gave only Tk 50 billion as an interest for the bank lending.
"The SMEs who needed support for survival have yet to get the financial help, partly because of poor relations with banks and partly due to the lack of adequate documents," he noted
Dr Zahid Hussain, former lead economist at the World Bank told the FE: "Only remittance inflow is in good position in the economy, other macroeconomic indicators have either flattened or below the pre-COVID level."
He said value added tax or VAT collection is poor meaning that the consumption remained poor.
VAT is an indirect tax and users pay for it. So many use it as a proxy indicator for measuring consumption behaviour.
He said the importation of capital machinery remained poor, which means that there is no fresh investment or expansion.
He said there is a possibility of a strong rebound of the economy in the second half of the calendar year as consumption may pick up at that time as many parties, especially wedding ceremonies, remained postponed due to the COVID-19.
He, however, said Bangladesh now needs quick procurement of vaccine.
"We have to procure it quickly to inoculate the citizens," he said.
On the upside, the capital market, which had remained shut for more than two months, rallied at the end of the year.
The index rose to 5,402 points on December 30, nearly 1,000 points higher than the early period of the year.
There was another piece of good news: all required spans of the Padma bridge were installed in the year, creating hope for its inauguration in the foreseeable future.
The educational institutes, however remained closed until December since March 26 last that has created frustrations among students and guardians.
However, the institutes may reopen in February or March as the ministry is taking necessary preparations for this.
The admission activities at the private institutions have already started, though their public peers halted it on a High Court order on December 29.