Since gaining independence in 1971, Bangladesh has demonstrated consistently high economic growth rates, which has increased the well-being of the local population in recent decades.
Since 2014, according to the World Bank classification, the country has moved into the group of countries with lower-than-average incomes (from among low-income countries), and today the national GNI per capita continues to increase annually. Moreover, Bangladesh is considered one of the most successful countries among the least developed (according to the UN), and therefore the issue of its exclusion from this group is currently being considered.
One of the proofs of the success of the Bangladeshi economy is its resilience demonstrated during the COVID-19 pandemic: the country managed to avoid recession and maintain positive dynamics of real GDP growth at 3.4% in 2020 and 6.9% in 2021. At the same time, the main driver of the development of Bangladesh's economy in recent years has been the national textile industry (exports of clothing and footwear), as well as remittances from migrant workers. In 2022 Bangladesh's real GDP growth was 7.1%, which is significantly higher than the average for the Asia-Pacific region in the same period (4.1%).
The positive dynamics is due to the recovery of entrepreneurial activity, as well as the effect of deferred demand and increased investment in infrastructure. Meanwhile, the global price increase, the weakening of the national currency, the rapid reduction of foreign exchange reserves and the persistent balance of payments deficit have a negative impact on the socio-economic situation in Bangladesh. In particular, Bangladesh recorded an increase in the Gini coefficient to 0.334 in 2022, compared with 0.324 in 2016. and 0.321 in 2010, which indicates an increase in socio-economic inequality, including due to high unemployment, primarily among young people in urbanized areas. A reflection of Bangladesh's difficult macroeconomic situation in 2023 was a decrease in growth rates to a more moderate 5.8%.
Socio-economic challenges, especially the difficult situation on the labor market, led to an increase in public discontent and the beginning of large—scale anti-government protests in Bangladesh, which resulted in the resignation of the Prime Minister of the republic and the formation of a transitional government in mid-2024. Domestic political instability has seriously affected the country's economic growth forecasts: The IMF expects Bangladesh's real GDP growth to reach 5.4% by the end of 2024 and decrease to 4.5% in 2025. The World Bank also forecasts an increase in poverty and social inequality in the country against the background of political uncertainty and continuing economic problems — high inflation and depreciation of the national currency.
The rapid increase in inflation in Bangladesh in recent years has been facilitated by the growth of government debt, the devaluation of the Bangladeshi taqi and the shortage of supply of goods in the domestic market, which was further aggravated by the country's structural socio-economic problems. By the end of 2023, the price growth rate amounted to 9.0%, while, according to forecasts, in the medium term, the inflation rate in the republic will increase due to political and economic uncertainty. The Central Bank of Bangladesh has begun the process of tightening monetary policy since May 2022, as of October 2024, the key rate is set at 9.5% (the cumulative rate increase was 475 bps).
