Coronavirus crisis may see Bangladesh poverty rate double, warns SANEM

In addition to the 34 million people below the poverty line in Bangladesh, 36 million may join the group if the coronavirus crisis persists for three more months, according to SANEM.

The researchers of South Asian Network on Economic Modeling, led by Executive Director Selim Raihan, published their assessment on impacts of the COVID-19 pandemic in the country on Friday.

It estimated the number of vulnerable people by lifting the poverty line 1.25 times,

The 36 million people are “non-poor” but can be categorised as the vulnerable population, SANEM said in a media release.

It used the latest Household Income and Expenditure Survey data of Bangladesh Bureau of Statistics.

The researchers have run simulations which reveal that with a negative income shock of 25 percent, the overall poverty rate will be 40.9 percent.

It means another 20.4 percent population may fall into poverty, sweeping away years of achievements in poverty alleviation.

Simulation results suggest that most of the vulnerable people, 43 percent, will be concentrated in economic activities like crop, animal and fishing production.

Among the rest, 16 percent are currently engaged in manufacturing activities including readymade garments, 11 percent in retail trade, 10 percent in transport, and seven percent in construction.

Given that the majority of these people are employed in informal activities or 85 percent of the employed, any employment shock, as in COVID-19, is “feared to have severe implications to the overall level of poverty in the country”, SANEM said.

Region-wise, 40 districts will experience the rise in the poverty rate more than the national average, according to the researchers.

They include Rangamati, Mymensingh, Sunamganj, Cox’s Bazar, Nilphamari, Narail, Chottogram, Netrokona, Chuadanga, Sherpur, Barguna, and Shariatpur.

The estimated impact is found to be lower for Dhaka, Narayanganj, Gazipur, Munshiganj, Brahmanbaria and Narshingdi.

“However, since the initial hot spots of infections are concentrated in many of these areas with a high density of population, in reality, fall in income of households in these regions can be much higher than our assumption of 25% income shock,” SANEM  said.

The higher concentration of small-scale trading activities, which can be heavily hit by the lockdown, may result in much more depressing impacts than the estimates.

SANEM welcomed the government’s stimulus packages and social protection programmes to help the people navigate through the crisis.

The success of these initiatives depends on three factors, the researchers said.

These are:

>> Effectively identifying the vulnerable people and thereby determining the nature and duration of support.

>> Ensuring that the genuinely affected industries and poor and vulnerable people receive support.

>> Introducing a monitoring and evaluation mechanism to ensure efficiency, transparency and accountability in the distribution mechanism.