Macro Analysis /

Bangladesh: Update on local developments in light of Covid-19

  • 51 infected, 25 recovered, 5 deaths officially at end of 4th week of Covid-19. Holiday from 26th March to 11th April

  • Overall economic slowdown with expected loss in export, remittance and productivity. Only silver lining is low oil price

  • Banking (-ve), Telecom (+ve), Pharma (neutral), Consumer staples (neutral), Consumer durables (-ve)

IDLC Securities
31 March 2020
Published byIDLC Securities

Bangladesh is currently experiencing a 10-day long ‘holiday’ consisting of a five-day general holiday declared by the government (from 29th March to 2nd April), four weekends, and one public holiday (Independence Day on 26th March). The holiday encourages everyone to stay at home and at the same time differs from lockdown as it allows people to get out of home for food, medicine, and other emergency reasons. Today the holiday has been extended till 11th April, 2020. Bangladesh stock market will remain close till 11th April 2020.

A brief at what is happening in Bangladesh:

February 1: 312 people returned from Wuhan but they were kept in institutional quarantine for fourteen days. No one shows any symptoms of COVID 19. 

February 2 - Feb 28: Increased health screening at the airport and no one was allowed to leave the airport without proper screening. 

March 1 – March 6: Several thousand people came from Covid-19 affected areas and they were not kept at institutional quarantine rather was directed to maintain the home quarantine. 

March 7: First COVID 19 patient detected. Three persons were detected on the same day and two of them returned from Italy. 

March 16: All educational institutions declared close. 

March 18: First official death from Covid-19. 

March 22: Several private organizations started home office so there were fewer people on the road

Mar 25: Prime minister gave a speech to the nation and declared extended public holidays for both public and private organizations. Only banks are open for a limited time with a very limited scale of retail transactions in selected branches. 

Mar 31: Prime minister extended the holiday till 11th April. Till today, the official confirmed COVID-19 case is 51, recovered 25 and death from the COVID-19 is 5. 

Update on business activities:


  • The economy is supposed to get huge benefits from a lower oil price since Bangladesh is an oil-importing country. However, the decline in oil price oil means economic pressure for oil-exporting countries in the middle east where a significant number of expatriates currently reside. Therefore, there is likely to be a pressure in the remittance in the coming months. At the same time, the spread of pandemic throughout the world resulted in the cancellation of cUSD3bn export orders, thus affecting c7% of total export. Also, there has been a reduction in domestic productivity due to the overall slowdown in business activities amid the pandemic. 
  • Altogether the economic loss is likely to be as much as 1.1% of GDP (USD 3bn impact), according to an ADB estimate. The Finance Minister of Bangladesh echoed the same. 
  • ADB also estimated a loss of 894,930 jobs in the worst-case scenario.

 Banking Sector

  • The central bank reduced the CRR Requirement by 50bps and Policy Rate by 25bps. (Bangladesh government declares policy support for Covid-19)
  • The central bank has also relaxed classification criteria.
  • Two hours of time for the daily transaction (only cash and foreign-exchange related).
  • Very slow loan disbursement and deposit collection in March.
  • Banking industry on overall borrowing from the central bank to maintain daily activities .
  • The interest rate cap will be effective from April 1.

Mobile Money and online transaction

  • Increased mobile wallet transaction limit to BDT 200,000 from BDT 75,000 in a month and waived any fees for cash withdrawal for Upto BDT 1000.
  • We are observing an overall increase in online transactions and limited movements in retail stores.

 RMG Sector

  • USD 600mn incentive package from the government to ensure business survival.
  • USD 3bn order has been canceled amid Covid-19. 
  • 95% of the RMGs are closed from 29th April to 4th April. Few are open to make Personal Protective Equipment (PPE).


  • The Cabinet Division and the Ministry of Public Administration asked the telecom operators to make services available throughout the Covid-19 outbreak. (The regulators seem to have relaxed their stance on Grameenphone.) 
  • We expect high data usage during the holidays as people spend more time on social media during their leisure. Despite low customer acquisition and supply chain bottlenecks, we expect an increase in data revenue due to the significant increase in average megabyte per user (AMBPU).
  • The impact on voice is not clear since the increase in social calls is largely offset by a decrease in business calls.
  • We expect a low level of capex during the first half of the year.


  • The pharmaceuticals companies are continuing their regular business operation. 
  • We expect a significant increase in sales of medicine in March. Even though drug stores are open during these holidays, people are accumulating stocks of medicine at home since they prefer limited movements. Therefore, we expect a good 1Q 2020 for pharmaceutical companies. However, the advance purchase of medicine also suggests that there may be a slowdown in retail consumption until the stock replenishes.
  • The government has suggested the pharmaceutical companies to keep a reserve of Azithromycin (antibiotic), Hydroxychloroquine and Chloroquine (essentially malaria drugs for, but thought to be effective against Covid 19), Oseltamivir (an antiviral drug for Influenza) to supply them in the government and private hospitals. Therefore, the purchase of institutional sales may increase during Covid 19.
  • The lock-down had some setbacks in the entire API supply chain during February. Fortunately, the regular shipments of API have resumed from the last week of February. However, prices of some API have increased and we do not expect the pharmaceutical companies to increase medicine prices now. Therefore, we expect some pressure on the profitability in 2Q and 3Q 2020.


  • The production and distribution of consumer staples, including tobacco, are still ongoing, with some minor but manageable setbacks. the sales volume, however, varies from day to day. During some days, there are exceptional demand of products as people hoard goods, followed by a slump until the stock replenishes. But the cycle seems shorter than that of the pharmaceutical products. 
  • The business of consumer discretionary products, on the other hand, came to a halt as majority of the stores are closed due to holidays. we expect a significant negative growth in sales this year for consumer durable products for two reasons apart from the closure of stores. Firstly, consumers are prone to spend more money for consumer staples during the pandemic than for consumer durables. Also, they are preferring to keep buffer cash at hand for emergency. Secondly, the likely slowdown in remittance will reduce the purchase power of the families depending on it. All of these happening prior to Eid-ul-Fitr, the religious festive that generates at least 30% sales of discretionary products.