World Bank: Bangladesh’s GDP growth to drop to lowest in 20 years due to political instability

Bangladesh is reeling under economic distress. Due to the inefficiency of the interim government, political instability, and administrative weaknesses, GDP growth will decline to 3.3 percent.

Staff Correspondent

Bangladesh’s economy seems to be gradually exhausted as it falls into a deep vortex of uncertainty. Political instability, the inefficiency of the interim government, a collapse in investment, soaring inflation, and stagnation in industrial production—the combined impact of all these factors is pushing the country’s GDP growth to its lowest level in two decades.

According to the latest forecast by the World Bank, in the 2024-25 fiscal year, Bangladesh’s gross domestic product (GDP) growth may stand at a mere 3.3 percent—the lowest in the last twenty years, excluding the COVID-19 pandemic period.

This warning was issued in the World Bank’s “Global Economic Prospects” report released last Tuesday.

The report states that Bangladesh’s economic growth is stalling due to political uncertainty, rising import costs of capital goods, foreign exchange shortages, and obstacles to private investment.

The international organization noted that the collapse in investment is unprecedented in the last decade.

Industrial production is being hampered by declining imports of capital goods. Despite repeated increases in interest rates to control inflation, the desired benefits have not been achieved.

Lower and middle-income families are struggling to afford daily necessities, healthcare, education, and housing due to the impact of inflation.

Economists say that in such dire situations, ordinary people suffer the most, as they lose employment, see their incomes shrink, and are forced below the poverty line.

Compared to neighboring countries, Bangladesh’s growth outlook is even more disappointing. The World Bank forecasts that Nepal’s GDP growth will rise to 5.2 percent and Bhutan’s to 7.6 percent in the next fiscal year.

These countries are making progress in industry and investment, especially by leveraging success in hydropower generation and opportunities for electricity exports.

Meanwhile, in Bangladesh, development expenditure is decreasing, while current expenditure and subsidies are being increased to cover deficits—which could create long-term economic imbalances.

The Bangladesh Bureau of Statistics (BBS) has already indicated that GDP growth is expected to fall to 3.97 percent.

While agricultural sector growth was 3.30 percent last year, this year it will drop to 1.79 percent. Although the industrial sector has seen some growth, the services sector is also facing stagnation.

The World Bank states that political stability and business-friendly reforms are the only way to revive investment.

Economists warn that if this environment of instability and uncertainty continues, not only growth but also poverty, unemployment, and social inequality could take a severe turn.

Now the question is—can Bangladesh truly recover without long-term political solutions and economic governance? Does the interim government have the competence to handle such a situation?