Food price shocks have slowed down the country's poverty reduction rate during the year 2005-2008 despite the economic growth during the period was the highest in the country's history, a World Bank report said.
The World Bank said rate of poverty in impoverished Bangladesh has declined to 40 per cent of the population in 2005 from 49 per cent in 2000 when the country's Gross Domestic Product growth averaged 5.3 per cent annually.
The GDP grew over six per cent a year between 2005 and 2008 --- the highest since the country's independence ---, but rocketing food prices caused by global hikes and natural disasters have likely slowed down poverty reduction, the bank's poverty assessment report said.
"Given that GDP grew at around six per cent annually during 2005-08, poverty rate would have been expected to decline by around five percentage points in the period," said the report, a copy of which is obtained by the FE.
"But with the impact of food price shock (equivalent to three percentage point increase in poverty rate) factored in, poverty rate would have declined by roughly two percentage points over the same period," it added.
The assessment report titled "Poverty assessment for Bangladesh: Creating opportunities and bridging the east-west divide" was prepared by the Washington-based development lender early this month.
Some 56 million people --- roughly 40 per cent of the country's population --- have been living under the poverty line when the last nationwide household survey was conducted in 2005, down from the highest 57 per cent in early 1990s.
The average annual rate of poverty reduction during 2000-2005 was the second highest among the South Asian nations, with robust and accelerated growth led by agriculture and industry playing key roles behind the sharp cut in poverty, it said.
But "recent shocks to the Bangladeshi economy in the form of natural disasters and rising food prices have partially dampened the rapid progress in reducing poverty," it added.
The report said the impact of food price shock, especially that of the main staple rice, "has likely negated some (but not all) of the reduction in poverty brought about by economic growth between 2005 and 2008."
Food price, particularly rice, in the country has almost doubled since early last year, forcing millions of poor households to cut back on their daily meal consumption.
It said the share of rice in a household budget averages around 24 per cent for an average Bangladeshi household and 33 percent for poor households.
The WB report said regional inequality and some natural shocks have also eroded the poverty reduction rate in recent years, with the incomes of the country's western and northern regions lagging far behind the eastern and the central regions.
"Differences in wage growth and job-creation patterns help explain the widening East-West gap in poverty. Wages grew robustly in the Eastern part of the country but stagnant in the West," it added.
"There is some evidence that the areas at a high risk of natural disasters are also more likely to be poor and have lower access to markets and infrastructure-conditions that are likely to exacerbate the impact of a natural disasters and contribute to poverty traps," the report said.
Terming the remittance as the key factor in reducing poverty, the report said the poverty rate among households receiving remittances from abroad is 17 per cent compared to 42 per cent among the rest.
"Poverty is most prevalent among daily wage workers and marginal or subsistence farmers, while the better-off tend to be engaged in salaried employment or non-farm self-employment," it said.
The report said the existing safety-net programmes being undertaken by the government are still inadequate to address the vast needs of the poor and the vulnerable.
"Only about 13 per cent of households (including 23 per cent of the poorest ten per cent) benefit from at least one safety-net programme. For example, the poorest divisions have much lower proportion of population covered by safety-nets than does in Sylhet and Dhaka."
