Improving economic stability in Bangladesh
Business Desk:
Since gaining independence in 1971, Bangladesh has seen impressive economic growth, with an average gross domestic product (GDP) growth of 6.4% between 2010 and 2023. Poverty has even declined to 5% since 2022. However, there is still work to be done to improve the economic stability of Bangladesh so that the country can thrive.
Bangladesh faces several obstacles on the path to upper-middle-income status. The financial sector faces numerous issues, including rising inflation and a balance of payment deficit. Private sector credit growth has decreased due to “tighter liquidity conditions, reduced demand for trade finance, and rising uncertainty.” In 2023, Bangladesh Bank’s reports showed an increase in loans written off, unpaid, or rescheduled, a detriment to economic stability in Bangladesh.
The industrial sector has taken a hit in tandem with Bangladesh’s financial woes. Due to disruptions in imports, high energy prices, and power shortages, production has slowed to a crawl. Furthermore, because of rising inflation, demand for products has decreased. GDP growth declined from 7.1% in 2022 to 6% in 2023.
Despite these challenges, Bangladesh’s young population, expanding digital economy, and ongoing infrastructure projects offer a path forward. With strategic reforms targeting financial stability and industrial resilience, the country still has a real shot at breaking free from these constraints and reaching its development goals.
Bangladesh needs to strengthen trade competitiveness through reform to improve the financial sector. Suppose Bangladesh expands its export markets, develops trade skills, and monitors performance. In that case, its economy may improve through a diverse collection of imports made by a skilled workforce.
Another way to improve economic stability in Bangladesh would be to enhance domestic resource mobilization by deepening local capital markets. This would promote alternative solutions without a reliance on foreign capital. In addition to reforms necessary to improve stability, a group also aids low-income regions locally where poverty persists.
The Pathways to Prosperity for Extremely Poor People (PPEPP) is a project focusing on poverty reduction within villages in Bangladesh. From October 2022 to September 2025, the project’s mission is to provide low-income districts with three important tools:
” Sustained livelihoods and income
” Improved nutritional habits, primarily among women and children
” Improved access to agricultural services to promote labor and receive wages
In addition to these objectives, the PPEPP project focuses on clean resources for impoverished districts, working to improve water salinization.
Between the broader solutions for banks and businesses and the narrower solutions taking place in their homes, Bangladesh has the potential to achieve upper-middle income status. Due to the change in government in 2024, Bangladesh has taken strides to improve economic stability. However, the risks to stability are still prominent. Therefore, if Bangladesh hopes to achieve upper-middle income status, its government has to be careful how it conducts itself in the future in these uncertain times.
– The Borgen Project.