Uncertain politics, unsettling economy

Bangladesh's much-anticipated parliamentary elections are scheduled for next February. And they could not have come at a more fraught time for the country. More than 16 months have passed since the interim administration took office, and unofficial estimates indicate a downward trend in the government's approval ratings. Compounding the situation and muddying public sentiment are the uncertain outcomes of the betting games played out on social media.

One does not need to be a born pessimist to urge the interim administration to scale back its promises and carefully manage the electorate's expectations.

Several "what if" scenarios could influence the missing pieces in the country's political jigsaw puzzle. The first is the timeline for the return of BNP's acting chief from exile in London. The second is the feasibility of the referendum or "gono vote" proposed by the chief advisor. The third concerns the possibility of an alliance between BNP and the other two parties, Jamaat and NCP. Finally, the ebb and flow of violence and tension—partly linked to the ICT judgment against the former prime minister, who fled to India on August 5 last year—adds to the uncertainty. Political parties have voiced their positions on these issues, leaving voters puzzled, with some appearing indifferent to the outcomes.

Alongside the political maelstrom, economic uncertainties have compounded the existential crisis for ordinary citizens. Recent inflationary projections have raised concerns about resolving bread-and-butter issues. There is hope that, in the coming weeks, as the cool winds settle in, some progress will emerge towards stability, with less chaos and mob rule, moderation in price and exchange rate volatility, and de-escalation of hatred and the blame game.

The road to a post-election "magic land" still has rough patches ahead. Medium- and small-business owners face continuous unrest on the streets, which has instilled fear and uncertainty. Investors are wary of entering an ecosystem that has endured repeated shocks, while job creation remains virtually at a standstill.

For fixed-income and low-to-middle-income earners, the price of essentials has not fallen despite positive inflation numbers. A survey of retirees last week revealed that, except for potatoes, most items—including vegetables, eggs, onions, and meat—remain beyond the reach of the average consumer.

On the positive side, the country's foreign exchange reserves are rising—a notable achievement of the current government. Critics, however, argue that this is partly due to a lower import bill, resulting from reduced demand, consumption, and affordability. Direct foreign investment has dwindled to a trickle, and the International Monetary Fund (IMF) awaits engagement with the elected government. Unemployment stood at 2.73 million in the October-December period of fiscal year 2024-2025, while prices have surged due to informal levies. Meanwhile, hundreds of factories remain closed, partly due to politically displaced owners going AWOL and shortages of gas and electricity.

There are, however, some silver linings. The garment industry is likely to continue, even with a 20 percent tariff on exports to the US, benefiting from higher tariffs on India and China. The country signed a 30-year lease on Laldia Container Terminal in Chattogram, representing an investment exceeding $550 million—one of the largest Public-Private Partnership (PPP) investments in the nation's history. In April 2025, Bangladesh received around $650 million from the World Bank to develop the Bay Terminal Marine Infrastructure Project in Chattogram. Both initiatives are expected to create significant employment.

In sum, if political instability continues, it will negatively impact the economy, discourage investment, and make life more difficult for the common citizen. Political uncertainty, lack of government policy, corruption, and banking sector stress remain key factors weakening the economy. While economic recovery is possible, political stability and effective policy implementation are essential.

Bangladesh is passing through a crucial juncture, with international lobbies increasingly active. Fortunately, Hasina is no longer central to national politics, although sympathy and support for Sheikh Mujibur Rahman and the Awami League persist among a small segment of the population. Much will depend on the next election. Once a political government is formed, there may be accommodation for grassroots leaders and members of the Awami League.

What the country urgently needs is sanity. It must address critical national issues such as law and order, political stability, restoring confidence in the business sector (both local and foreign), and reviving the languishing education sector and youth development programmes to create employment opportunities.

Dr Abdullah Shibli is an economist working at a non-profit fiscal intermediary. He previously worked for the World Bank and Harvard University.

Views expressed in this article are the author's own. 

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