Impact of COVID-19 on the Economic Growth of Developing Countries: Evidence from the Readymade Garment (RMG) Sector in Bangladesh

Abstract

Purpose: This study aims to evaluate the impact of the COVID-19 pandemic on the ready-made garment sector and the overall economy of Bangladesh as a developing country, employing innovative econometric methods. The primary focus is on understanding the consequences of the unique SARS-CoV-2 virus, which triggered the global COVID-19 pandemic. Design/Methodology/Approach: This study involves interviews with experts in the ready-made garments (RMG) industry to compile a comprehensive registry of COVID-19 pandemic response strategies. Balanced Weighted Mean (BWM) metrics are developed, and data is collected from industry experts. A Bayesian BWM analysis is applied to evaluate the survey data. Time series variables, including GDP, total export valuations (TEX), garment sector sales revenue (REVGS), garment sector employment (EMP), remittances (REM) inflow, and the unemployment rate in Bangladesh (UNR), are used to assess the consequences of the COVID-19 pandemic on the economy. Findings: The research revealed that the COVID-19 pandemic, marked as the most significant global economic crisis since the 1930s, severely impacted the RMG sector in Bangladesh. Also found that in FY 2019–20, the sector saw its smallest contribution to export earnings and GDP in the past six fiscal years. Export revenue dropped by 18.45% from the previous year, missing the target by $10 billion. RMG export orders also decreased by $3 billion, and Bangladesh's RMG exports to Vietnam declined by $2.11 billion, causing a shift in rankings. Originality Value: This study provides a unique and comprehensive inquiry into the COVID-19 pandemic's influence on the RMG sector in Bangladesh, emphasizing the importance of this sector to the country's economy. It offers new insights into the economic consequences of the pandemic and presents valuable recommendations for the RMG sector's revival in the post-pandemic era. This research offers recommendations for the RMG sector's recovery from this economic downturn.