Bangladesh is faced with economic challenges that are commonplace across least developed countries. There is poverty and inequality, inadequate provision of healthcare, education and housing. Additionally, public services and infrastructure are awfully deficient in meeting the needs of the people. The ecological crisis is deepening. To further add to the current woes, growth is slowing while inflation and unemployment continue remain high.
In the case of Bangladesh, the political culture also hit rock bottom under the repressive and deeply corrupt Shekh Hasina regime from 2009 to 2024. Her political regime was effectively run like a criminal syndicate. She and her family members controlled the syndicate aided by cronies. The Economist (August 10) wrote, "The rigged election in January confirmed the country had descended into thuggish-one party rule".
In fact, she ruled the country from 2009 to 2024 with an iron fist. According to Human Rights Watch, security forces have been implicated in more than 600 enforced disappearances since she assumed power in 2009. According to other human right organisations, it is estimated that at least 2,597 persons were victims to extra judicial executions, custodial torture and fatal shootings at protesters by Bangladesh's security forces. Her government has also reached beyond Bangladesh's borders to harass and intimidate human rights advocates and activists abroad using various tactics of transnational repression.
The economy of Bangladesh recorded an average growth rate of 6.5 per cent in the last decade to 2023, above the 4.3 per cent average for the Asia-Pacific region. The quality of statistical information provided by the Bangladesh Bureau of Statistics (BBS) has always been of questionable quality, especially relating to GDP and human development indices. It has been alleged that Hasina herself was responsible for manipulating the major macroeconomic indicators like GDP, inflation rate, unemployment rate and others. Yet, the World Bank (WB) and the International Monetary Fund (IMF) have given their seal of approval to the growth figures.
A report published on November 15 by Brussels based the International Crisis Group further confirms data manipulation by Hasina. The report says Hasina's administration manipulated key economic indicators including GDP for much of its time in office including siphoning off over US$100 billion out of the country (FE, November 16). According to a World Bank (WB) report (October 4, 2023), "Bangladesh has an inspiring story of growth and development, aspiring to be an upper-middle income country by 2031." No wonder Hasina even drummed up her idea of Bangladesh to become a prosperous and high-income developed country by 2041. The IMF assured its continuing support to achieve this aspiration of Hasina.
But now we also know that the interim government is faced with economic mess left behind by the Hasina regime and dealing with the daunting economic rebuilding tasks ahead has decided even to delay Bangladesh's graduation into the lower middle-income country due in 2026. The latest Bangladesh Development Update published by the World Bank on October 15, 2024, highlights the challenges faced by the country in many fronts such as high inflation, balance of payments deficit, financial sector vulnerabilities and increasingly limited job opportunities for the youth, especially women and educated youth. The Update also projects GDP growth to decelerate to 4 per cent in 2024-25 driven by subdued investment and manufacturing sector activities. The Update, however, depicts optimistic growth outcomes from 2025-26 onward. The International Monetary Fund (IMF) also considers that growth has slowed, and inflation remains high. It forecasts that Bangladesh's GDP will decline to 4.5 per cent in 2004-25, below its previous forecast of 6.6 per cent (FE, 26 October).
The growth that was achieved during Hasina's rule was largely achieved through infrastructure investments comprising a very selected set of mega projects. While such investments helped to achieve the economic growth momentum, these mega projects also opened opportunities for corruptions of massive scale benefitting her family members and cronies. Not surprisingly, growth thus achieved did not translate into job creation and the benefits of growth mostly flowed to the already well-off persons closely linked to her criminal syndicate.
The WB Update also points out the country's worsening income inequality and warns that the rate of extreme poverty increased for the last three consecutive years. Income inequality is a broader concept than poverty, and it encompasses differences in income, wealth, status, access, and opportunity. Growth is less efficient in lowering poverty in countries with high initial levels of income inequality
Income inequality in Bangladesh has worsened over the last decade. According to the "Household Income and Expenditure Survey -2022" conducted by the Bangladesh Bureau of Statistics (BBS), the Gini Coefficient related to income rose to 0.499 in 2022, up from 0.482 in 2016 and 0.458 in 2010. The Gini Coefficient for urban areas was higher at 0.539 than in rural areas at 0.446 in 2022 indicating income is more unevenly distributed in urban areas.
Rising income inequality coupled with stagnant to declining household income (which is further aggravated by high inflation) along with high levels of youth and graduate unemployment and very widespread underemployment clearly point out that economic growth achieved under the Hasina regime cannot be considered as inclusive.
On a global scale, according to the IMF as mentioned in its Blog (October 15), the fiscal outlook of many countries might be worse than expected for three reasons-- large spending pressures, optimism bias of debt projections, and sizeable unidentified debt. On the same day, the World Bank (WB) in a press statement said "the global goal of ending extreme poverty - less than US$2.15 per person per day by 2030 is out of reach. However, the WB sets an extremely low borderline or extreme poverty. This is a serious admission of failure on the part of the WB which is supposed to contribute to reduce global poverty.
According to Asian Development Bank (ADB), 18.7 per cent of the world population lived below the national poverty line in 2022. During the same year the proportion of employed population below US$2.15 purchasing power parity a day was 5.8 per cent. Multidimensional poverty headcount ratio was 6.61 per cent of population in 2022. Economic slowdown and rising price levels will further push up the poverty rate in Bangladesh.
As regards Bangladesh, the ADB mentioned that the unemployment rate was 5.2 per cent in 2022. Such a figure is misleading and does not portray the real figure of unemployed in the country. Unemployment is the principal cause of poverty, and poverty is failure to maintain minimum standard of living. The Bangladesh Labour Force (BLF) Survey 2022 also finds that close to 60 million people, accounting for 84.9 per cent of total working population in the country, are employed in the informal sector. It is also noteworthy that the report also points out that out of the total employed women in Bangladesh, 96.6 per cent are in informal employment.
The informal sector is marked by very lowly paid and precarious jobs. It thrives mostly in the context of high unemployment, underemployment, poverty, gender inequality and precarious work. Therefore, employment in the informal sector is unable to guarantee the minimum standard of living.
This figure of US$2.15 per day cannot be a reliable indicator and cannot be taken seriously to extrapolate the number of very poor people living in this planet or in any country including Bangladesh. It is estimated that at US$5 a day, there will still be 40 per cent of world's population in poverty. In fact, the WB and its policies along with those of the IMF do not appear to have helped reduce poverty in any meaningful way.
Poverty reduction is no longer considered simply as an automatic byproduct of economic growth as mainstream economists used to consider in earlier days. Thomas Piketty in his analysis demonstrated income inequality, under capitalism, goes hand in hand with economic growth. Income inequality affects the pace at which growth enables poverty reduction.
Income inequality is a broader concept than poverty. It has been well recognised by economists that income inequality hampers poverty reduction. Widening income inequality and poverty as well as the pervasive inequities in access to education, health and finance remain the defining challenges for Bangladesh today. Sadly, there is little discussion - let alone debate - about inequality in the country. More importantly rising income inequality and poverty can seriously destabilise Bangladeshi society.
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