The following article was written by me, and was published in the Economic Trends section of the Keystone Quarterly Review (Volume-31) on November 30, 2020: https://lnkd.in/g9nGxzn The article covers the prospect for recovery of the global economy, and how Bangladesh might perform in its journey across the recovery curve. Moreover, major signs of potential economic recovery and shapes of projected recovery curves are discussed.

1. Keystone Quarterly Review (KQR) Vol. 31
Economic Trends:
The Prospect for Global Economic Recovery and where Bangladesh stands on the Recovery Curve
Image source: “Economic Recovery.” www.cagle.com/joe-heller/2009/08/economic-recovery
The Prospect for Global Economic Recovery
- Published in Keystone Quarterly Review - KQR (Volume-31), written by Md. Tanzirul Amin
[November 30, 2020]1
Over the phase of the past ten months the global economy has been trembled by the
biggest ever unsettling thrust since WWII. As economies are opening up and recovering to
regain their losses on many fronts, huge gaps in performance of the countries are also
becoming evident. For 2021 as a whole, the OECD sees the world economy growing 4.2
percent after falling by roughly the same amount in 2020 and in 2021 China will account for
around one-third of the world’s economic recovery. The IMF projects that China's GDP will
grow by 1.9% in 2020 (8.2% in 2021), negative 10.3% for India, the US economy will
struggle to reach its pre-pandemic stage next year and Europe will languish below the 2019
levels for several years. Recovery figures depend on different economic structures and
responses of the countries, to the Covid-19 pandemic. Lockdown, a double-edged sword,
may be an effective measure to slowdown the spread of Covid-19, but cripples productions
and services, and caused disappearance of nearly 500 million jobs.
Economic Recovery signs to watch out for
Economists have varying predictions, but many point to specific signs to watch for, which
may indicate when the economy is beginning to bounce back (Zetlin, 2020). The personal
finance site GOBankingRates polled a wide range of experts, either interviewing or reviewing
published remarks, and put together 17 predictions for when we might see the economy
begin to improve (Olya, 2020). These are some of the top signs to watch for:
i. Unemployment claims will start to drop
ii. Consumers will begin spending willingly as they start to feel safe and are comfortable
with their job
1
This article was published in the Economic Trends section of the Keystone Quarterly Review - KQR (Volume-31)
on November 30, 2020. Weblink: https://keystone-bsc.com/kqr-economic-trends.html

2. Keystone Quarterly Review (KQR) Vol. 31
Economic Trends:
The Prospect for Global Economic Recovery and where Bangladesh stands on the Recovery Curve
iii. B2B spending will start to rise, indicating that businesses are starting to invest in growth
and should also mean new jobs
iv. A vaccine or a cure for Covid-19 becomes widely available, preferably both.
Meanwhile some indicators are holding up, the last few weeks has seen a still unresolved
tension between monthly macroeconomic data, like retail sales and employment,
performing better than expected, although more novel, high-frequency data sets have
shown the recovery stalling or reversing. A medley of letters is arising based on predictions
for economic recovery after coronavirus-linked lockdowns, to indicate whether we can
expect a bounce-back, a slow-burn recovery or relapse (Ranasinghe and Carvalho, 2020).
Source and Image Credit: Brookings Institution and Financial Times
We must familiarize with the idea of a K-shaped recovery: when some sectors
strengthen/recover and others downgrade, rather than one collective recovery that follows
some drawable path.One line optimistically extends upwards to the right, while the other
concurrently declines. Back in late March/early April, there was a good deal of discussion
around what a possible recovery-pattern could look like; possibly L, V, W, Z, or even a Nike
Swoosh recovery. Economists cite stocks soaring above widespread pain in the real
economy as a vivid example of the best-of-times, worst-of-times dynamic emerging from
this pandemic (Newmyer). They say, it is evident that a stuttering recovery is not shaped like
a U, V, or even L, as much as a K. However, stock market is not the only indicator of the
divergent rebound, as such a staggered recovery in job-market is witnessed.
 Z-shaped recovery: the most optimistic scenario. The economy bounces back quickly
after an economic slowdown due to pent-up demand. This happens when the
slowdown doesn’t affect the income levels of the people and the demand for goods and
services is simply delayed until the pandemic subsides. This shape indicates that the
effects of the pandemic will not last long.
 V-shaped recovery: the second-best scenario, when a growth plunge is followed by an
equally sharp recovery. The economic returns quickly to the pre-pandemic trend line

3. Keystone Quarterly Review (KQR) Vol. 31
Economic Trends:
The Prospect for Global Economic Recovery and where Bangladesh stands on the Recovery Curve
after a sharp downfall, but there is no temporary boom (like in the Z-curve). This is
because the demand for goods and services is not delayed, but foregone. This happens
when the effect on income is temporary. It points towards a sharp fall followed by a
sharp recovery.
 U-shaped recovery: unlike V-shaped, though the GDP curve bounces bank to
pre-pandemic trend line, the recovery is slow. This is because of incomes being affected
due to job losses. When recovery takes more than a couple of quarters, because
economies have suffered a faster and deeper contraction than in 2008-09, this may be
the likeliest outcome. The Financial Crisis of 2008 in the US, which lasted 18 months
followed by a slow recovery, was U-shaped.
 Swoosh-shaped recovery: like the logo of Nike, it indicates a sharp drop followed by a
long slow recovery. This implies a sharp downturn, then gradual recovery as lockdowns
are eased more gently than they were imposed.
 W-shaped recovery: when the economy bounces back quickly to fall into recession
again, double-dip. If the easing of lockdown restrictions initially boosts activity but the
effects of unemployment and corporate bankruptcies then start to filter through. This
may also occur if second wave of infections emerges, as has been the case in some
Asian countries.
 L-shaped recovery: the worst-case scenario, the economy fails to recover for years;
with a long period of low GDP. The Great Depression of the 1930s, which lasted 43
months with four straight years of negative GDP growth, was L-shaped. This may occur
if the infection continues rising, forcing protracted lockdowns. L-shaped outcomes may
be a risk for those emerging markets less able to engage big stimulus and often rely on
commodity exports.
How nations combat Covid-19 and Economic Turmoils
Unprecedented and quick interventions by central banks around the world protected
economies from calamitous catastrophes and helped the economies crawl back from
pandemic induced crashes. In June, the United Bank of Switzerland (UBS) projected a
V-shaped rebound for China, while the rest of the global economy will still remain under
pressure. Though the service sector accounts for more than a half of China's economy,
manufacturing too makes up a bigger share, making recovery faster-than-expected as China
opened factories and restored the global supply chain as soon as they contained the spread
of Covid-19 (Gupta, 2020). Emerging markets are being split apart by an increasingly
K-shaped recovery. Stocks and currencies from wealthier developing nations have
outperformed their poorer peers since the coronavirus outbreak. The gulf may even get
wider if the pandemic leads to deeper recessions in the most disadvantaged countries. As
long as the virus lasts the K-shaped divergence will continue, with rapidly rising debt and
deep recessions, the cost of servicing debt is going to get more burdensome and might
result to financial crises or major debt restructuring.
New COVID-19 cases have been diagnosed at a rate of more than 125,000 per day through
early November, each day thousands are dying, and hospitals are reaching capacity in some
countries in a replay of the dire early days of the outbreak nine months ago. State and local
governments are beginning to impose new restrictions. Red flags are appearing across a
range of high-frequency measures of retail foot traffic, small business hiring and other data,
and even previously bullish forecasters are increasingly concerned consumers may buckle in
the face of rising health risks. The economic outlook is hazy and investors don’t have a clear
sense of market direction either as things stand. G20 had announced to inject over USD 5
trillion into the global economy to offset the impact of the pandemic. There’s consensus

4. Keystone Quarterly Review (KQR) Vol. 31
Economic Trends:
The Prospect for Global Economic Recovery and where Bangladesh stands on the Recovery Curve
that gross domestic product (GDP) will contract substantially this fiscal, but estimates vary
widely and there’s no visibility on the recovery timeline. The IMF, on late-October, projected
that the world economy would contract 4.4% this year; however, reckoned that Bangladesh
would be among few blessed economies to see absolute growth.
Where Bangladesh stands on the Recovery Curve
Over the last 20 years Bangladesh's economy has been growing steadily and the nation is
now spoken of by some development institutions as a model of development. It is essential
that this does not go to Bangladesh's head, as about 20% of the population is still ultra-poor.
The economy is heavily dependent on the export of cheap textiles and remittances by
laborers working abroad. The World Bank estimates that this year's remittances will
decrease by about 25 percent because of the coronavirus pandemic. The textile sector is
extremely competitive and volatile. Dr Shamsul Alam, member of the General Economic
Division, said Bangladesh fared well as almost all major drivers of the growth such
as agriculture, export and remittance have performed better in recent times; these helped
Bangladesh achieve better growth than many others even in Covid-19 period. However,
economists express concerns over the sustainability of the per capita GDP position given the
low revenue-GDP ratio, government revenue expenditure, and purchasing power in
Bangladesh. Further aggravation of the global recessionary economic condition due to the
lingering novel coronavirus pandemic, along with oil price volatility and ongoing geopolitical
tensions in the Middle-East, might have a serious negative impact on future export earnings
and wage earners' remittance inflows to Bangladesh.
The latest outlook by IMF, the per capita GDP in Bangladesh is expected to grow 4% in FY20
and to reach $1,888, surpassing India (projected to plunge by 10.5% to $1,877 this year). It is
projected that Bangladesh's economy would grow at 4.4% and rebound in 2021.Though IMF
states, India will exceed Bangladesh in per capita GDP in 2021, when the country's growth is
projected 8.8% compared to 4.4% of Bangladesh. However, per capita PPP of Bangladesh
this year is projected at $5139, while it is projected $6284 for India. The report said,
Bangladesh invested only 27.73% of GDP in 2020 which is lower than 49% of Nepal, 48% of
Bhutan and 27.77% of India (Tully, 2020). Government's total expenditure in Bangladesh is
also the lowest at 14.97% in the fiscal 2020, which is 38.71% in Maldives, and 31.16% in
India. Bangladesh is projected to have only 8.173% revenue compared to the GDP which is
lowest in South Asia. Afghanistan has the highest 29.87% revenue-to-GDP ratio in the region
followed by Bhutan (27.62%) and India (18.08%).
A range of expansionary fiscal and monetary policies are likely to boost economic activities
in full swing in the near future. Bangladesh Bank announced an expansionary monetary
policy for the fiscal year 2020-21 that aims at pumping cheaper money into the economy for
the post- pandemic recovery. BB cut the repo rate by 50 basis-point to make cheaper money
available for lending, and cut the reverse-repo rate by 75 basis points to take money from
banks at a lower rate and thereby influence the market in a downward direction. BB
Governor stated, the prime objectives of the monetary policy stance and monetary
programmes for FY21 are the economic recovery from the adversity of the Covid-19
pandemic, rehabilitation of the production capacity of the economy, and maintaining dual
goals of price stability and quality growth. Lending capacity will increase significantly after
the reduction in policy rates comes into effect, however default loans and inflation may rise
if loans do not go to the productive sector.

5. Keystone Quarterly Review (KQR) Vol. 31
Economic Trends:
The Prospect for Global Economic Recovery and where Bangladesh stands on the Recovery Curve
Source: World Bank, The Business Standard
Bangladesh's remittance earnings have been projected to increase by about 8% in 2020
showing little sign of recovery (Bhuiyan, 2020), last year remittance earnings were registered
around $18.35 billion, this year it is expected to reach around $19.8 billion, as per the World
Bank's Migration and Development Brief 33 published on October 29. Bangladesh’s
point-to-point general inflation rate has increased to 6.44% in October, the highest in seven
years. BB warns of the risks associated with the release of the credits from the coronavirus
stimulus package that aims to help the private industries soften the blow of the pandemic
crisis in order to prevent job cuts. Export businesses may suffer another great shock in the
coming months as Covid-19 infections have already marked a second wave in major export
destinations, particularly the European Union. The RMG sector, top foreign exchange earner,
witnessed a 7.8% year-on-year drop in exports in October. Among the other major export
sectors- leather and agriculture saw their exports fall by over 7% and 8% respectively (Uddin,
2020a). According to latest data released by the Export Promotion Bureau, the country
received $2.95 billion in export earnings last month, which was $3.07 billion in the same
month of the previous year, around 6% less compared to the government's target set for
the month. Amid this somewhat gloomy situation, the jute sector emerged as an
outstanding performer by posting a whopping 40% year-on-year increase in export earnings
in October. Frozen and live fish, pharmaceuticals, plastic products and non-leather footwear
are some notable sectors that did well last month (Uddin, 2020b).
Based on the current macroeconomic and global trade conditions, economists have a high
tendency to bet on either a Swoosh-shaped recovery or a W-shaped recovery for
Bangladesh, and a lot depends on the severity of the second-wave and how the country acts
to overcome the raising concerns/obstacles. Economists and exporters are hopeful about
overcoming the crisis, but said it would require diversifying products and markets. The most
obvious changes brought about by the pandemic are the infusion of data-enabled services
into all spheres of life, virtual meetings are now commonplace and economic activities have
increased on a range of digital platforms. Business change is a must as learning from the
ongoing pandemic will help businesses alter their operations faster than what was thought
earlier. The increased need to connect with customers along with the expanded delivery
services system by applying personalized virtual experiences, along with the new normal
scenario involving working from home should be embraced in the post-Covid-19 economy
with a view to running organizations by leveraging the power of the Internet.

6. Keystone Quarterly Review (KQR) Vol. 31
Economic Trends:
The Prospect for Global Economic Recovery and where Bangladesh stands on the Recovery Curve
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Economic Trends:
The Prospect for Global Economic Recovery and where Bangladesh stands on the Recovery Curve
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