What are the current realities of Bangladesh’s economy?
As we come close to the end of 2025, one question that surfaces quite often is what the current realities of Bangladesh's economy are. It has become even more important in the aftermath of the people's uprising last year, which changed the political, economic, social and cultural landscapes of the country. Over the past few years, the economy has been facing tough challenges. Thus, the question regarding its current state is logical.
The first aspect to consider is the progress the country has made in improving its social indicators and expanding physical infrastructures. The life expectancy in Bangladesh is 74 years (2023), as compared to 72 years in India and 68 years in Pakistan. Child mortality in Bangladesh is 31 per 1,000 live births (2023) compared to 59 in Pakistan and 28 in India. Over the years, Bangladesh has been able to reduce the incidence of both national and extreme poverty, even though they have taken an upward trend in recent years.
For all latest news, follow The Daily Star's Google News channel. Inequality and discrimination are a critical reality of our economy. The benefits of human development, as indicated earlier, were not equitably distributed across the country, between rural and urban areas, or among various socioeconomic groups. There are differences in deprivation as well. For example, while the adult literacy rate (15 years and above) in Barisal division is 73.42 percent, it is only 66.53 percent in Sylhet division, according to the 2022 census. Child mortality among the highest income quintile in Bangladesh is 20 per 1,000 live births, while for the bottom quintile it is 50 per 1,000 live births. The incidence of multidimensional poverty in rural areas is nearly 27 percent, more than twice the rate of 13.48 percent in the urban areas.
Inequalities and discrimination are not only economic; they feature prominently in social, political and cultural arenas as well. Moreover, discriminations occur not only in outcomes; they are built into opportunities too. The poor and marginalised groups are deprived of health facilities and educational opportunities. They have marginal access to resources, credit facilities and digital services. As a result, these groups also encounter deprivation in employment and income. Marginalised people who live on ecologically fragile lands also face different forms of deprivation. Various marginalised groups are deprived on political fronts and their voices, particularly those of the indigenous groups, are not adequately represented at the national level. On many occasions, the issue of discrimination and lack of security faced by religious minorities has been raised in several forums. These go against the fact that all citizens of the country, irrespective of their religion, caste and creed, have equal rights.
Women still face discrimination in opportunities, which result in unequal outcomes for them. Both within and outside the home, women are subjected to various forms of harassment and violence. Such violence may be physical or mental, they may be domestic and sometimes they result in sexual violence.
Another aspect of the country's economy at present is the worsening quality of outcomes. Often, we hear that impressive progress has been made in the education and health services, but rarely is it mentioned that most of this progress is primarily quantitative expansions, not qualitative transformations. With multiple stratified structures in education and health services, educational opportunities and outcomes and health services have become further polarised. In education, getting certificates, and not knowledge, has become the primary goal; in the health sector, the priority is on infrastructure, not quality services across the board.
Some fear that in the coming days, Bangladesh may face a series of impediments and challenges both domestic and global. On the domestic front, sluggish economic growth, coupled with low investments and expanding joblessness, may continue to persist. Agricultural and manufacturing production has not reached its desired level as yet. The adverse impacts of high inflation will continue to negatively impact people's lives.
Currently, the production, savings and investment levels are going through a sluggish phase. With many of its enterprises remaining non-operational at the moment, the RMG sector is in a bind. The foreign direct investments are not coming forth as expected, which is affecting job creation. More than 27 lakh people in Bangladesh are now unemployed (2025). In 2024, nine lakh graduates were unemployed. Nearly 19 percent of youth (15-24 years) are not in education, employment or training (NEET), according to a 2023 BBS survey. Such a waste of human resources is a significant loss to the economy.
The possibility of enhanced poverty and vulnerabilities of the marginalised population may appear as a significant challenge. Eighty-eight percent people from the low-income groups cannot have two full meals of rice; they eat bread or biscuits for one of their daily main meals. About 60 percent of people in this group, whose monthly income is between Tk 10,000 and Tk 15,000 cannot afford breakfast. If this trend continues, malnourishment is likely to rise among this group, particularly affecting children.
Power and energy problems are expected to continue as a challenge as well. On the one hand, high electricity generation cost is a concern, while on the other, huge power and energy subsidies are also an issue. Adopting power generation treaties without competitive bidding and excess dependency on imported inputs for power generation increase the energy cost. Absence of timely coordination and depreciation of the taka have contributed to the increased cost too. The huge subsidies provided to the power and the energy sector are enjoyed by the rich and powerful section of society. About 54 percent of the power and energy subsidies go to the top 40 percent income group.
Some existing fundamental structural impediments will pose a hindrance to the economy's future progress. For example, even if some improvements are observed in the financial sector, a lot more still needs to be done to ensure economic disciplines and norms in the sector. A culture of transparency and accountability has yet to take root in the economy. There have also been some improvements in the banking sector, but problems still exist in terms of bad loans, inadequacy of credit, inefficiency and ineffectiveness, weak management, etc. A lack of policy and implementation coordination among different sectors of the economy is still prominent. In coming days, sluggish revenue generation may appear as a challenge for Bangladesh as well.
The global economy is projected to suffer from sluggish growth for a while, the effect of which will be felt in Bangladesh too. First, in the absence of countermeasures, the US tariff hikes are likely to slow down exports from Bangladesh to the developed world. Second, if the LDC graduation takes place as scheduled (November 2026), the country will lose some of the trade benefits it has enjoyed as an LDC. It will have to be prepared to tackle these new challenges. Third, the ongoing wars and political tensions in various parts of the world will have their impacts on our economy too.
These are some of the realities facing Bangladesh's economy at present. Though formidable, these are not impossible to overcome. With commitment, proper priority setting, national preparedness, focused policies and strategies, the economy can be steered towards its desired goals.
Selim Jahan is former director of the Human Development Report Office under the United Nations Development Programme (UNDP) and lead author of the Human Development Report.
Views expressed in this article are the authors' own.
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