Webinar on Impact of COVID-19 on Bangladesh’s LDC graduation and way forward
Bangladesh was listed as a Least Developed Country (LDC) back in 1975, four years after the first group of LDCs was listed by the United Nations in its resolution 2768 (XXVI) of 18 November 1971. After 43 years, in 2018’s triennial review by the Committee for Development Policy (CDP), a subsidiary body of the UN Economic and Social Council (ECOSOC), Bangladesh met all three thresholds for LDC Graduation, namely GNI per capita, Human Asset Index (HAI), and Economic Vulnerability Index (EVI). Bangladesh’s progress towards graduation will be reviewed again in the upcoming triennial review of CDP in February 2021. With the recent economic and development trajectory, Bangladesh was on track for a second recommendation by the CDP to ECOSOC for graduation. Subsequent to a three-year transition period during 2021-24, Bangladesh could officially graduate from the LDC category in 2024.
The triennial review in February 2021 will be based primarily on data collected in 2019 and thus would not be able to assess the socio-economic impact of COVID-19 which has created both the demand and supply side challenges. With lives and livelihoods still under threat from the pandemic, it is already evident that the consequences of this misfortune will be relatively more pronounced and far-reaching for the LDCs – one of most structurally disadvantaged group of countries in the world. The economies of LDCs compared to other nations are affected the most for two reasons- first, the missing emergency resources for crisis management, and second, slowing down of financial flows because of tapering off government revenue, exports and remittances in the aftermath of the crisis. Most LDCs’ export earnings depend on a small basket of commodities or manufactured goods. These export earnings have fallen sharply due to a demand shock. This, along with a consequent fall in domestic economic activity has left LDCs with little or no fiscal space to protect their disadvantaged and marginal populations.
The COVID-19 pandemic is unfolding in Bangladesh rapidly. As of 14 June 2020, Bangladesh recorded a total of 84,379 infections and 1,139 deaths, which is the highest among all 47 LDCs. The Government announced general holidays and closure of all non-essential businesses starting 26 March and extended the holidays to end May. As the country struggles to address the so-called dilemma between saving lives and securing livelihoods, it is obvious that the economy has suffered a serious setback, manifesting in loss of jobs, income and savings. The prospects of growth in the coming years will depend significantly on the state of the global economy which is in a deep recession. These adverse impacts of the pandemic will fall disproportionately on the traditionally "left behind" citizens, slowing down attainment of the Sustainable Development Goals (SDGs). All the activities of the main sectors of Bangladesh’s export and revenue earning have come nearly to a halt. The garments sector, accounting for around 85% of Bangladesh’s total export earnings, is facing an existential threat - the 4.1 million workers, mostly women, are facing an uncertain and bleak future. Many export orders have been either cancelled or suspended and thus making evident that the economic growth of Bangladesh will see a slump in 2020. Loss of many jobs abroad pose two critical challenges to the economy- poor remittance flow and return of millions of migrant workers. Thus, there are justified concerns whether the pandemic will jeopardize the smooth and sustainable transition of the largest LDC in the world.
At this juncture, Bangladesh needs to review its position critically, and make key decisions on the pathway and timeline of its graduation from LDC status. Presumably the decision is mostly political, but an expert discussion could bring some feasible policy options for consideration and reference for the Government of Bangladesh.