Income gap to deepen further by 2025 as inflation bites in Bangladesh: WB
Business Report :
Economic inequality in Bangladesh is expected to widen further in the short term as persistent inflation, stagnant wages, and falling household purchasing power push vulnerable families deeper into economic distress, according to new projections released by the World Bank.
The findings, published last week as part of the Poverty & Equity Assessment 2025, reveal that the Gini index the primary global measure of inequality has been rising steadily from 2022 and is projected to continue climbing through 2025.
The World Bank warns that both income inequality and the “prosperity gap,” which measures how far households are from achieving a decent standard of living, are set to worsen, placing heightened pressure on low- and middle-income groups.
Although national consumption inequality has remained relatively stable, the report highlights stark regional differences. Rural areas saw a slight reduction in consumption disparities, with the Gini index declining from 29.2 to 28.2. In contrast, inequality in urban centres widened significantly, rising from 33.1 to 34.5, signalling deepening divides in city living standards driven by higher costs, stagnant earnings, and slower job growth.
Income inequality which captures earnings, remittances, and asset returns deteriorated even more sharply. The Gini index for income rose from 51 to 54 points, reflecting the concentration of economic gains among higher-income households. “The upward shift in Bangladesh’s inequality indicators suggests that economic growth is becoming increasingly skewed toward better-off groups,” the report noted.
The findings come at a time when Bangladesh is already experiencing a two-decade trend of rising inequality. Since 2016, consumption growth has become progressively less pro-poor, benefitting middle- and upper-income groups while leaving the poorest families with minimal gains. The economic shocks of the past three years including inflationary pressure and reduced real wages – have accelerated this pattern.
The World Bank estimates that an additional 20 lakh people will slip into poverty in 2025 alone, pushing the national poverty rate above 21 percent. Since 2022, around 60 lakh people have fallen into poverty, while the poverty gap is projected to widen by two percentage points by year-end, signalling deeper deprivation among the most vulnerable.
The impact has not been uniform. Households with high-skilled wage earners, stable formal-sector jobs, or access to remittances have remained relatively insulated from the economic downturn. Some have even seen improvements in welfare, widening the gap between the protected and the precarious. “This divergence in household welfare is anticipated to increase inequality by nearly 2 Gini points by 2025,” the report stated.
However, the report cautions that improvements beyond primary schooling have been less equitable. While secondary school enrolment has increased due to policies introduced since the 2000s, inherited circumstances still play a significant role in determining access to upper secondary education. As a result, inequality remains more pronounced at higher levels of education.
As Bangladesh navigates inflationary pressure and slowing economic momentum, the report signals an urgent need for policies that protect vulnerable households, boost real incomes, and reinforce long-term human development gains.