Second Covid wave to prolong economic downtrend: ICCB

The second wave of Covid-19 in Europe and US could further prolong the economic downturn while Bangladesh is already battling with the crisis, said the International Chamber of Commerce, Bangladesh (ICCB) on Monday.

It made the observation in its Executive Board report presented at the 25th annual council held on a virtual platform.

Like most other emerging economies, the report said, Bangladesh will also be affected and will have to tackle a number of key issues in order to achieve the desired GDP growth.

The pandemic has created a massive economic contraction that will be followed by a financial crisis in many parts of the globe, as nonperforming corporate loans accumulate alongside bankruptcies, according to the report.

Sovereign defaults in the developing world are also poised to spike, observed the report, adding that the crisis will follow a path similar to the last crisis and the crisis will hit lower-income households and countries harder than their wealthier counterparts.

Speaking on the occasion, ICCB President Mahbubur Rahman said that Bangladesh is now faced with battling both the pandemic and its economic fallout.

"In such a situation, economic risks are not only limited to short term, but might extend to major future productivity losses both through labour and capital.

"The economic crisis is likely to trigger a series of corporate and household debt defaults turning into a financial crisis," he added.

Bangladesh's graduation from the LDC status by 2024 will lead to the loss of trade preference in major export destinations and loss of other preferences.

So, Bangladesh must focus on FTAs with major trading countries, he stressed.

There are around 7.8 million enterprises in the country – 90 percent of them are micro (including cottage) enterprises.

This sector contributes around 25 percent to the GDP, amounting to around $79 billion.

The high cost of doing business affecting the SMEs. Besides, many SMEs have been suffering tremendous setbacks in terms of production, marketing and sales.

The SME sector generates 30 percent of the total employment in the country as well, added Mahbubur.