Post Covid-19 Macroeconomics Challenges Faced By Bangladesh

Introduction:
The COVID-19 pandemic has had far-reaching effects on the global economy, and
Bangladesh is no exception. Even post-Covid, it has also left its alarming mark on the global
economy. As a developing country with a large population, Bangladesh is also facing unique
macroeconomic challenges in the post-COVID era. The government has implemented various
measures to address the challenges, but sustained efforts are required to ensure a resilient and
sustainable economy. In this assignment, we will explore the post-COVID macroeconomic
challenges faced by Bangladesh and evaluate the policy responses of the government to
address these challenges.

Post Covid-19 Macroeconomics Challenge:

All the post-COVID macroeconomic challenges faced by Bangladesh are significant, and
each of them poses a unique set of challenges. However, the most important challenge is
perhaps the reduced economic growth caused by the pandemic. The pandemic has
significantly slowed down the economic growth in Bangladesh, with various sectors of the
economy, such as the readymade garment industry which accounts for majority of
Bangladesh’s export, facing significant disruptions. As a result, many businesses have had to
shut down, leading to significant job losses. Reduced economic growth has a ripple effect on
other macroeconomic indicators, such as fiscal deficit, external sector balance, and
employment.
The government's fiscal deficit widened to 6.94% of GDP in FY2021 and 7.25% of GDP in
FY2022. Even though the growth in 2021 and 2022 has increased since 2019, it is much less
than before the arrival of COVID, which is one of the major challenges for a developing
country like Bangladesh. The external sector balance was also affected, with a decline in
exports and remittances from overseas workers, leading to a decline in the current account
balance. The government has announced various measures to address the economic
slowdown, such as providing cash transfers to vulnerable households, introducing
employment schemes, and extending credit support to affected businesses. However, the road
to recovery is likely to be long and challenging as Bangladesh's economic growth is again
impacted due to the post-Covid Russia and Ukraine war. Russia's war in Ukraine has
prevented Bangladesh from fully recovering from the epidemic, which has caused a dramatic
increase in Bangladesh's current account deficit, a devaluation of the Taka, and a decrease in
foreign exchange reserves. This sparked a cost-of-living crisis in Bangladesh, draining the
central bank's reserves at an alarming rate that forced the government into severe austerity
mode and destabilized the economy. The gross domestic product (GDP) growth of
Bangladesh is expected to decelerate to 5.3% in 2023 amid global economic disruption
caused by the Russia-Ukraine war, said the Asian Development Bank (ADB). Addressing the
reduced economic growth challenge will require coordinated efforts by various stakeholders,
such as the government, private sector, and civil society. It is also essential to address
structural challenges, such as infrastructure bottlenecks, skill shortages, and weak institutions,
to promote inclusive and sustainable economic growth.

Year GDP Growth Rate

2019 7.88%
2020 3.45%
2021 6.94%
2022 7.25%
Fig.1: GDP Growth Rate

This table shows the comparison of the GDP growth rate of Bangladesh of 2019, 2020, 2021
and 2022. In 2019, the GDP growth rate of Bangladesh was 7.88%, which was significantly
higher than the growth rate in the subsequent year, 2020, which was 3.45%. The COVID-19
pandemic has presented significant macroeconomic challenges for Bangladesh, with the
country's GDP growth rate showing a marked decline in 2020 compared to previous years.
However, Bangladesh's economy showed some signs of recovery in 2021 and 2022, with an

estimated GDP growth rate of 6.94% and 7.25%. Although the growth rate improved in 2021
and 2022, but it is comparatively less than the pre-corona GDP growth rate. Economic
growth is not steady due to post Covid challenges. Lower economic growth than before is
now a big challenge for Bangladesh.

Conclusion:

The COVID-19 Pandemic has had a significant Impact on Bangladesh's Economy, with a
decline in GDP Growth Rate In 2020. However, the government has taken several measures
to mitigate the impact of the pandemic on the economy, including providing stimulus
packages, increasing healthcare spending, and introducing policy reforms to promote
investment and exports. Despite these efforts, the economy's recovery remains uncertain, and
future economic growth will depend on the effectiveness of these measures, as well as the
global economic recovery and ongoing pandemic developments. Therefore, it is essential for
the government and other stakeholders to continue monitoring and addressing the challenges
to ensure sustained and inclusive economic growth in Bangladesh.