In its country report for Bangladesh the IMF said that the decline is the largest one-year decline in the last three decades. The negative impact of COVID-19 pandemic on the Bangladesh economy will be concentrated in the last quarter of FY 20 and the first quarter of FY 21.
However, the country is projected to achieve gradual recovery in the second quarter of FY 21 when it is projected to achieve GDP growth rate of 5.7 percent. The IMF recommends that the central bank of Bangladesh should strengthen its monitoring of the banking sector during the pandemic period.
The IMF report points out that the Current Account Deficit (CAD) of Bangladesh is also projected to widen to 2.2 percent of GDP in FY 20 and further to 3.5 percent in FY 21 due to fall in remittances and export earnings. COVID-19 has heavily affected the Ready Made Garment (RMG) sector with reports of cancellation of orders worth 3 billion dollar.
RMG sector contributes above 80 percent of the total export earning of Bangladesh. US and Europe are the main destinations of RMG export from Bangladesh.
Suffering under the impact of Corona pandemic, the workers in the RMG sector are facing the possibility of lay off.
The Chief of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Rubana Haq said on Thursday that factories were working at 55 percent of the capacity. If the situation does not improve, there will be no option than to lay off workers.