With over 6 percent growth in a world straggling between 3 percent and 4 percent, Bangladesh's economic miracle was oft cited as a growth story that had gone right.
Bangladesh stayed the course to expand 6.6 percent in FY25, with the momentum accelerating to 7.6 percent next fiscal, according to International Monetary Fund forecast in June.
Another IMF review released in December 2023 had pegged the country to achieve $4,330 per capita income by 2029, higher than India’s projected per capita of $4,280. In 2023, India’s per capita income at $2,500 was lower than $2,620 for Bangladesh.
But the mirage came undone on August 5 as lakhs of Bangladeshis stormed into the opulent palace of its longest running prime minister, who has fledo India in search for a shelter. Protests that began against reservation in government jobs unleashed a tsunami against the Sheikh Hasina-led government.
Cracks in the Bangla growth story
Besides charges of nepotism and corruption against the ruling dispensation led by Hasina, economic data shows why the country could not find many takers within or outside for its growth story. Rising unemployment, a sense of denial from the government, sharp rise in income inequality were some of the factors that broke the Bangladesh economic model.
The country had made tall strides in becoming the garment hub for the world, contributing nearly 8 percent to the global textile exports.
Although government data indicates that unemployment held steady at 3.5 percent in the first quarter of 2024, unchanged from the previous year, World Bank data points to rising unemployment among the youth.
In 2023, youth unemployment rate for the country scaled a high of 15.7 percent compared with 13.5 percent prior to the pandemic and 9.9 percent a decade ago, according to World Bank.
Data released by the Bangladesh Bureau of Statistics shows that in 2023, around a fifth of the youth, aged 15-24 years, were neither in education, nor employment, nor training. The ratio was higher at 22.3 percent in urban areas.
A rise in poverty deepened the crisis. The World Bank data shows that poverty, defined as people living below $2.15 per day, increased again to 5.1 percent in FY24 from 4.9 percent in the previous fiscal because of a falling growth in FY24 and rising inflation.
“Poverty is projected to rise marginally in FY24, with stagnant inequality. External buffers need to be rebuilt to ensure macroeconomic stability. Export diversification, financial sector reforms, and revenue mobilisation are key policy priorities ahead of Least Developed Country (LDC) graduation in 2026,” the World Bank had said.
Inflation, a tax on poor, was 9.4 percent in FY24 and is expected to ease only to 7.2 percent in FY25 and 5.9 percent in the following fiscal.
Adding to the mix was rising inequality. The household income and expenditure survey released in 2022 found that 30 percent of income was generated by the top 5 percent of the households, compared with 27.8 percent in 2016.
The top 10 percent cornered 40 percent of the country’s wealth in 2022, as per HIES data released by its bureau of statistics.
Bangladesh failed to sell its growth story narrative to foreign investors too. Data released by Bangladesh Bank, which is the country's central bank, shows that foreign direct investment dipped 14 percent to $3 billion in 2023. Moreover, new FDI was even lower as nearly three quarters of this was reinvested earnings from existing investors. The Bangladesh Bank website went inaccessible since August 5.
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