Due to prolonged inflation, employment crisis, and overall economic slowdown, poverty and inequality in Bangladesh may further worsen, the World Bank has warned. In its latest report published on April 23, the organization states that if the current trend continues, the national poverty rate could rise to 22.9% in 2025, up from 18.7% in 2022.
The report also highlights that the rate of extreme poverty—people earning less than $2.15 a day—could double to 9.3%, pushing an additional 3 million people below the extreme poverty line.
According to the World Bank, low-income families are the most affected due to high inflation and unemployment, which impacts food security, education, and healthcare sectors.
However, the report offers a ray of hope, projecting that poverty may begin to decline again from 2026 if economic momentum is restored and stable policies are adopted.
Experts emphasize the need for strengthening social safety nets, creating employment, and taking effective steps to control inflation to prevent long-term damage to the country’s development achievements.
Former World Bank Chief Economist Dr. Zahid Hussain told Bangla Tribune that long-lasting food inflation and stagnant real wages are deteriorating the poverty situation.
The report also states that in the second half of 2024, around 4% of the workforce lost their jobs. Wages for low-skilled workers fell by 2%, and for high-skilled workers by 0.5%. Real wages have been consistently declining for 40 consecutive months, forcing three out of five households to dip into their savings to meet daily expenses.
Slow Growth and Investment Crisis
The World Bank forecasts that Bangladesh’s GDP growth for the fiscal year 2024–25 could fall to 3.3%, down from 5.8% in 2022–23. The decline is attributed to stagnant investment, high interest rates, political uncertainty, and weak policy measures.
In the first half of the current fiscal year, annual development spending decreased by 24.1%, and capital goods imports dropped by 12%. Private sector credit growth stood at only 7.3%, the lowest in three decades.
Inflation and Labor Market Challenges
The average inflation rate in the current fiscal year may reach 10%, higher than the previous year, driven by high food prices, import costs, and supply shortages. Although tight monetary policy may reduce inflation in the long run, the labor market remains dependent on informal and low-productivity sectors, increasing income inequality.
Relief from Exports and Remittances
Despite overall economic pressure, remittances and the garment export sector have provided some stability. The current account deficit has narrowed to $1.1 billion, and foreign currency reserves remain stable at around $20 billion.
Impact of U.S. Counter-Tariffs
The World Bank notes that renewed counter-tariffs under U.S. President Donald Trump may reduce Bangladesh’s exports by 1.7% and GDP growth by 0.5 percentage points in 2025–26. However, significant impact is not expected in 2024–25.
Revenue, Financial Sector, and Foreign Debt
The revenue-to-GDP ratio in Bangladesh remains abnormally low at 7.4%, making it difficult to sustain development programs. Without increasing revenue collection, investments in human development and infrastructure may decline.
Government debt is expected to rise to 37.8% of GDP in the current fiscal year, up by 1 percentage point from the previous year. Foreign debt will also increase to 14.16% of GDP.
Outlook and Concerns
The World Bank suggests that if necessary reforms are implemented, GDP growth could reach 4.9% in 2025–26. However, political instability, delays in banking and revenue sector reforms, and policy volatility pose significant risks to economic recovery.
The World Bank’s latest “Bangladesh Development Update” warns that ongoing political uncertainty and global trade challenges could put further pressure on the economy. The report emphasizes the need for bold reforms to restore macroeconomic stability, including improving financial discipline, strengthening revenue collection, reforming the banking sector, and easing trade.