Economic devastation: How much longer?

Following the High Court's order to reinstate quota benefits in government jobs, a nationwide student movement erupted, demanding quota reforms. This movement significantly disrupted the country's economy and transportation systems. Particularly in mid-July, the protests intensified, resulting in widespread casualties and property destruction. According to the Home Minister, as of July 29, 147 people have died due to the protests, most of whom were university and college students. However, unofficial sources claim the death toll is 219. Such a high number of casualties due to student protests has not been witnessed in the 53 years since Bangladesh's independence, nor during the Pakistan era.

This student movement has astonished many. Notably, student protests are typically confined to educational institutions, but this time, the unrest spread nationwide, including incidents of vandalism against state properties. Observers believe that while students initially led the movement, political parties later became involved, exacerbating the violence and damage. Some argue that if the government had promptly engaged in dialogue with the students following the High Court's ruling, the situation might not have escalated. The exact impact of decisions made during this period will only become clear over time, but the losses incurred are irreversible.

The movement caused significant economic disruption. For six days, economic activities were paralyzed. While the situation has somewhat improved, it has not returned to normal, and it will take more time for full economic recovery. Dr. Ahsan H. Mansur, Executive Director of the Policy Research Institute, noted that the economic losses from the protests are substantial. Daily economic activities in Bangladesh typically generate around $1.25 to $1.5 billion, excluding agriculture and minor sectors, with daily economic output exceeding $1 billion.

Agriculture was less affected by the protests, unlike the ready-made garment and other industrial sectors. The transportation sector was particularly hit hard. For six days, the economy suffered the most, and while the situation has since stabilized, it is not yet fully normal. Curfew restrictions are gradually being eased, and government and private offices and factories have resumed operations, though production is not yet at full capacity. The overall economic impact of the protests is significant, with an estimated daily loss of $1 billion.

The student protests have also tarnished Bangladesh's international image, which could hinder foreign investment efforts. Political instability could deter both foreign and local investors. Bangladesh ranks 176th out of 190 countries in the World Bank's 'Ease of Doing Business' index, indicating a challenging investment climate. The recent unrest may further damage the country's reputation globally.

Bangladesh has been struggling with high inflation for nearly two years, exacerbated by global trends following the Ukraine war. While other countries have successfully controlled inflation, Bangladesh continues to experience inflation above 9.5%. Efforts to control inflation have largely failed, and the recent protests have worsened the situation, potentially delaying economic recovery.

Exports have been severely affected by the protests, with normal export activities not yet resumed. Imports and domestic transportation have also been disrupted, impacting supply chains and driving up prices of essential goods. The overall economic recovery is expected to be delayed.

The protests have also affected remittances from overseas workers. From July 1 to 24 last year, remittances totaled $1.586 billion, but this year, only $1.5 billion was received during the same period. The protests significantly disrupted banking operations, affecting remittance inflows. Remittances play a crucial role in the economy, and any disruption has a significant impact.

Additionally, efforts to undermine the government by dissuading expatriates from sending remittances through legal channels are harmful to the state. Attacks on state properties during the protests, including Metro Rail and BTV, are unacceptable and should be condemned. Such actions not only harm the economy but also damage the country's image abroad.

Some expatriates in the Middle East protested in support of the student movement, leading to their arrest and trial. Such actions damage Bangladesh's image and could result in host countries halting labor imports, which would be detrimental. It is essential to ensure that those responsible for property damage during the protests are held accountable, without innocent individuals being wrongfully targeted.

M A Khaleque: Retired General Manager, Bangladesh Development Bank Plc and Writer on Economic Affairs.