Economics Study Center

Second Wave of COVID-19 in Europe: Impact on Bangladesh’s Export Sector

11/21/2020

Ifreet Saraf, Rakibul Mobin, Most. Rukaiah Begum, Mahbubur Rahman

Cover Design: Inzamamul Haque Khan Alvy

As of this moment, while we’re pretending everything is usual, the world is still dealing with a pandemic which can undoubtedly be considered as the greatest challenge humanity has faced in the 21st century. Starting from December 2019, COVID-19 has infected over 50 million people worldwide and caused a death toll of over 1 million. Much to our concern, lately both the infection rate and mortality rate of COVID-19 has started to increase, which is being referred to as the ‘Second Wave’ of pandemic. After infection and mortality cases started declining in some parts of the world back in August, it seemed to be the nosedive of the first wave of the pandemic. Schools started online classes to prevent community gathering. But businesses can’t be conducted entirely on online platforms as those require exchange of products. Moreover, larger businesses like import-export require physical proximity between consumers and producers and individuals’ crossing international borders. It is projected that Europe will go into full lockdown in a few weeks (many of the countries have already imposed partial lockdown to prevent the fatality of the second wave). European countries are quite significant destinations of the exportable products of Bangladesh. So, it seems the second wave of COVID-19 can affect the export sector of Bangladesh negatively.

The first COVID-19 case in Bangladesh was detected on March 8, 2020. Administration had quite an ineptness tackling it. It had failed to enact a proper lockdown after the detection of the first case. Within a few weeks of arrival, cases of COVID-19 started skyrocketing. The health sector of Bangladesh was never sturdy enough to deal with a pandemic. The number of tests was inadequate accounting the vast population of the country. And for having an excessively dense population, social distancing became practically impossible especially in the capital. Hospitals weren’t properly equipped. Many doctors and healthcare workers had to be in contact with infected people without Personal Protective Equipment (PPE) which risked them to get exposed to the contagion. Quarantine and isolation of immigrants weren’t maintained properly. Government slackened the lockdown when infection rate was still increasing. So, technically the first wave in Bangladesh hasn’t been concluded yet.

After COVID-19 outbreak, the World Trade Organization and its members took safety measures on export and import trades. Complete ban on export would cause supply shortage in countries so they tried to regulate the restrictions according to the degree of necessity. European Union has exempted VAT on imported goods which are necessary (foods, masks, sanitizer etc.) to combat the effects of the COVID-19. It has also imposed a ban on exporting PPE from European countries. The World Health Organization has strictly emphasized on social distancing to reduce the contagion.

In late February and early March, countries in Europe imposed full lockdown to prevent the outbreak of COVID-19. Effective lockdowns decelerated the rate of infection in a few months. But from September, it has started to increase and this time at a much higher rate. This marks the beginning of the second wave. Countries like France, England, Belgium, and Germany announced their second nationwide shutdown in late October. In the meantime, western European countries recorded 4.1 million new cases of COVID-19, which was almost half million more than those of August. While it can be deducted simply that testing capacity in those countries has increased, experts aren’t denying the possibility of a stronger second wave of the pandemic.

Europe’s strategy to hold back the spread of SARS-COV-2

An upsurge of new cases of COVID-19 is ripping through European countries. Unlike the summer cases, the winter season is going to be far more vulnerable as experts report. An overwhelming percentage of new cases, if not vaccinated, will break apart the surge capacity of the hospitals set up in the spring. In France, one among four people is dead linked to COVID-19. They have entered lockdown from October 30 on forth, barring people from getting out of their houses, forbidding social gatherings except for grocery, medicine and schooling.

In Greece, 9 to 5 AM curfew is set up, shutting down elementary schools, kindergartens and daycare centers like other schools and universities enabling online classes. Two students were detained and fined with 3,000 euros for making an after hour party at home. Italy has imposed restrictions on movements, shutting down museums, shopping malls which have led to protests all over the country. Belgium doubled their hospitals and intensive care facilities as a preparation for the second wave, which were half occupied almost by October 26th. The UK kept open their educational institutions, curtailing non-essential movements. Pubs and restaurants are permitted for take-aways only. Weddings and funerals are allowed with only a specified number of people in Northern Ireland until 26th of November. In Germany, partial lockdown is imposed which is a less intense version of their previous lockdown enacted in spring. Spain has announced a new state of emergency, lessening travelling across regions and imposed nighttime curfew also. Slovakia decided to bring its entire adult population under testing to halt the spread of the virus. At the moment most of Europe is a red zone including Netherlands, Czech Republic, Serbia and much of France, UK and Spain.

Second Wave in Bangladesh

Health care facilitators, public service providers, our government or none of the people residing in the region have ever faced this kind of national emergency. Surgency in the fatality during the first wave has caused us so many losses. Authorities have declared to be prepared for the next wave in the upcoming winter. Cabinet division has sent notice to all public offices to wear face masks.

In offices, markets, shopping malls, mosques and at social events wearing a mask is made compulsory although only 10% of people are following strict guidelines. As per now, no restrictions on people’s movement have been imposed yet. Albeit the authorities are assuring us of being prepared with all types of necessary protection to combat this pathogen, people are yet to trust them. With hospitals lacking intensive care units, ventilation facilities people have suffered enough in the hassling covid testing, getting false reports and treatments. People are still reluctant to follow healthcare guidelines properly. Amid this situation, people are spotted travelling with family members, gathering in restaurants for free pizza offers, using public transports freely like pre-pandemic conditions. These scenarios only show their trajectory towards negligence.

Export Fluctuation and Our Economy

Being the world's second largest apparel exporter after China, Bangladesh who used to bring about 84% of export revenue only from the garments sector including knitwear and hosiery have faced loads of countermand of orders at the outbreak of the pandemic. Other export goods of Bangladesh include jute produced goods, home textile, footwear, frozen fish and shrimp.

Brands offering lower prices to the manufacturers left our export sector at peril. The buyer’s opportunistic pricing behavior has led to almost 70,000 unemployment only in the RMG sector. Europe accounts for 57% of our total exports and America, Asia accounts for 25% and 15% accordingly. Actual import from Bangladesh fell by 10% in October than the previous month.

Bangladesh’s export earnings crashed in March, dropping to 2.25$ billion from 2.85$ billion from last year in the ready-made garment sector. After deteriorating to 6% negative growth in June, it started to hold back. Growth in July and August brought relief among the workers. Experts were hoping for further growth in businesses for the upcoming Christmas occasion. All their hope and prophecy got backfired as soon as the second wave of coronavirus hit back the European countries and North America again. Jute and pharmaceutical sector have experienced commendable growth by 39.5% and 20% accordingly Yoy amid the pandemic. Leather goods dropped by 10.63% in this year. In July-October time period a 1% growth in export revenue was recorded than the previous year beating the target of 0.4%. Because European countries were lifting their travel bans and other restrictions after several months of closure.

Our PM’s stimulus packages including a 50$ billion for export-oriented industries and 127.5$ billion by Bangladesh Bank to expand the facilities of the Export Development Fund was really praise worthy. The revival from the impact of the great epidemical condition is not going to be a piece of cake for any country. Starting from the most to least developed countries affected by SARS-COV2 have a harrowing amount of budget deficit in their balance sheet. Unemployment rate was record high. Supply chain disruption, order cancellation, supply-demand shocks and cost-revenue imbalances increased unemployment, insecurities among investors, local businesses, retailers, enterprises and entrepreneurs. As for now, we can just hope that mother nature be mighty enough on her children to control her uprage and maneuver the winter wave to somewhat be less distressing.

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