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B'desh economy reels under instability
Publication Date : 08-03-2013
In a rough estimate, 15 days of shutdown have cost the Bangladeshi economy the equivalent of US$3 billion.
The costs do not take into account the brutal killing of people and damage to property.
Since December last year, the country has witnessed exactly 15 days of hartals (strikes) - each day causing a loss of around $200 million, by one estimate.
The estimated annual average cost of hartals is between 3 per cent and 4 per cent of the country’s $110 billion gross domestic product (GDP), according to a study.
These costs include foregone earnings and lost employment and output, as well as long-term impacts due to reduced savings, indebtedness, capital losses and reduced profitability for businesses.
One of the most serious aspects of damage caused is the negative image costs of hartals in deterring foreign investors from making their way into the country, making Bangladesh increasingly less able to keep up with regional competitors.
Strikes also impose non-economic costs on people, including considerable psychological stress and a sense of personal insecurity.
A study conducted earlier by the United Nations Development Programme (UNDP) and rough estimates by International Chamber of Commerce Bangladesh reveal these shocking figures and impacts.
Ahsan Mansur, executive director of Policy Research Institute, a research organisation, said no systematic study had been done on the impacts of a shutdown on the economy.
But citing the recent strikes and the UNDP study, he said the nature of cost of hartals and its impact assessment had to be redone.
Mansur said the effect of recent shutdowns was higher than in the past because of a disruption in road and rail communication, and fear of insecurity among people as also a lack of buying spirit.
“The recent hartals are much more damaging because the economy today is more integrated,” said Mansur, citing the fact that goods-laden trucks could not ply on roads even at night amid fears of damage.
“So the impact is not limited to shipment of export consignments only. It has also hurt farmers who send vegetables, fish and other agricultural goods to urban areas,” he said.
Disruption in communication also takes a toll on industries that cater to the domestic market. Products are piling up at their warehouses, he said.
A feeling of insecurity have affected domestic demand. “Businesses keep shops and offices open. But customers don’t come,” Mansur said.
However, Akbar Ali Khan, a former adviser to the caretaker government, finds the estimates by the UNDP ‘highly blown up’.
The static losses of hartal per year are likely to be in the range of 0.5 per cent to 1 per cent of the GDP, he said in an article published in The Daily Star earlier.
“Particularly, the losses resulting from strikes are compensated by private sector by substituting holidays as workings days and by working secretly during strikes,” Khan said.
Khondaker Golam Moazzem, additional director (research) of the Centre for Policy Dialogue, said hartals impact the economy as a whole. But the impacts on all sectors and all regions are not equal. So the overall effect may not be as high as it is perceived.”
“But the cost on economy would be higher for a prolonged hartal,” he said.