Covid-19 economic fallout recovery: Bangladesh outwits high-income countries

Bangladesh’s recovery from economic fallout of the first wave of pandemic has been more inclusive than even some of the high-income countries of the world, suggests a just-published survey result.

In between June 2020 and January 2021, proportion of pandemic-induced unemployment witnessed a 70% decline.

In June 2020—the month after the government-announced lockdown in Bangladesh ended—17.2% of main household earners of a sample population in rural Bangladesh reported being unemployed, but that percentage dropped to only 5.1 in January 2021.

People living in moderate to severe food insecurity also marked great improvement from 45% in June last year to only 16% in January this year.

The International Food Policy Research Institute (IFPRI) and Cornell University used pre-pandemic data and conducted two rounds of phone surveys on the same sample of over 2,000 rural households in June 2020 and in January 2021 to track the experiences and impacts of the Covid-19 crisis over time in Bangladesh.

And last week, IFPRI and Cornell came up with the findings suggesting that unlike experiences in some high-income countries, recovery has been relatively inclusive in rural Bangladesh.

IFPRI and Cornel University researchers quoted a recent Pew Research Center findings that lower-income adults in the United States continue to be left behind, with consistently higher rates of unemployment and income losses compared with “better off” adults months after the initial onset.

Similarly, they said, the European Union economy remains stifled amid recurring waves of the pandemic, with the EU economy commissioner predicting that the economy will not recuperate until as late as 2023.

“Encouragingly, ten months after the onset of the Covid-19 pandemic, (in January in Bangladesh) unemployment fell, income losses were diminished, and there were reductions in the prevalence of moderate and severe food insecurity,” a joint IFPRI, Cornell policy note stated drawing from the findings of their repeat surveys.

However, policy note stated that the prevalence of “mild food insecurity” had been significantly higher than the pre-pandemic period, suggesting a fragility in the economic recovery of rural Bangladesh.

 “These findings are not intended to diminish the economic fallout of the pandemic in Bangladesh, as well as the human costs of losing 9,046 lives due to Covid-19 in the country as of April 3, 2021—the most recent data available at the time that this note was published,” reads the policy note titled – “Signs of Recovery: Patterns of Food Insecurity Before and During Covid-19 in Rural Bangladesh.”

Although coronavirus continues to spread and poses a real threat to development gains, Bangladesh has emerged as one of the leading countries in terms of its Covid-19 vaccination distribution, it says.

“Bangladesh started a nationwide vaccination campaign in early February 2021, starting with adults over age 40. Although these developments have slowed the spread of the virus and paved the way for many dimensions of recovery, the resurgence of the pandemic starting in mid-March 2021 is a sobering reminder that the dynamics of the coronavirus pandemic tend to be quite erratic.”

IFPRI-Cornell survey found out that over 12% of the rural sample received Covid-related cash support at least once since the beginning of the pandemic, and over one-third (35.2 percent) of surveyed households received cash-based assistance. However, they note, such government-provided assistances gradually declined in recent months.

The policy noted recalled that amid the coronavirus pandemic, Cyclone Amphan hit Bangladesh on May 20, 2020, which affected 26 districts in southern and southwestern Bangladesh.

In response to the double crisis, policy note stated, the government increased its allocation for the gratuitous relief program nearly six-times to Tk30.62 billion in FY2020/2021 from the FY2019/2020 budget. There were other safety net programs implemented to mitigate the effects of the Covid-19 crisis, which includes, among others, one-off cash support to five million poor and vulnerable families through mobile financial services and different stimulus packages. 

“Despite an alarming rise in food insecurity in the immediate months after the onset of the pandemic, Bangladesh has shown encouraging signs of recovery in food security nearly a year later. Nevertheless, food security has not returned to pre-pandemic levels, reinforcing the importance of continuing to rapidly and rigorously collect data to guide evidence-based decision-making for an inclusive recovery process moving forward,” the research observed.

As their research outcome comes at a time when a second wave of pandemic was forcing Bangladesh to go for another bout of hard lockdown, The media wanted to know probable coping mechanism from Dr Akhter Ahmed, a lead researcher of the IFPRI-Cornell initiative.

He spoke of a few options for revamping the social safety net system that the government can consider to protect the livelihoods of the poor and vulnerable and to build resilience during the Covid-19 outbreak and beyond.

“In the immediate-term, the government can redesign conditional safety nets requiring work, like the Employment Generation Program for the Poorest (EGPP) and the food-for-work program, to make them unconditional cash or food transfer programs until the situation improves,” recommended Dr Akhter, who is also the country representative of IFPRI in Bangladesh.

He said, this will ensure that the poor who were receiving this kind of assistance beforehand are not cut off during this critical period.

“No extra cash, food, or listing of beneficiaries are needed to do this.”

Noting that household targeting in quick humanitarian relief is difficult, Dr Akhter suggested the government could rather, consider distributing relief to the whole community where the poor live, such as urban slums, thereby avoiding the cost and complexity of household-level targeting.

He further noted: “In Bangladesh, safety net programs mainly cover rural areas, there is a lack of programs for the urban poor. Although the Covid-19 outbreak has impacted everyone, lower income people living in urban areas are the hardest hit, whose livelihoods are seriously compromised and need immediate assistance.”

“Programs such as ‘cash for work’ or ‘food for work’ for urban environmental clean-up, maintenance of road-side trees and gardens, maintenance of primary schools programs, among others, are promising for both men and women. Physical work requirements in such programs greatly improve targeting performance because only the poor tend participate.”

In the longer term, an important area of expansion of social protection in Bangladesh is social health insurance, opined the IFPRI country head.

“Health-related shocks can have catastrophic consequences for low-income people and cause households to fall into poverty traps. Therefore, a well-designed social health insurance program for both urban and rural poor should be considered as an essential element of the social protection system in Bangladesh. This initiative should be piloted and evaluated before scaling up,” he added.