Gains in poverty reduction erode

Bangladesh’s progress in poverty reduction has suffered a significant reversal, with the poverty rate rising to 27.93 per cent in 2025 from 18.7 per cent in 2022, while millions of people remain vulnerable to economic shocks that could push them below the poverty line, according to a new study by the Power and Participation Research Centre (PPRC).

Around 31 million people belong to the country’s “fragile middle” – households living above the poverty line but lacking the financial security to withstand unexpected expenses or income losses.

The findings point to mounting pressure on household finances, persistent employment and healthcare challenges, widening inequality and a growing debt burden.

The findings were presented on Saturday at the launch of the book State of the Real Economy: Dynamics of Reversals and Resilience in Bangladesh at the CIRDAP Auditorium in the capital. The event coincided with the International Day for the Eradication of Poverty.

PPRC Executive Chairman Hossain Zillur Rahman and Senior Research Associate Namira Shameem, who edited the book, presented the key findings.

The study draws on PPRC’s State of the Real Economy (SORE) survey, conducted in May 2025 among 8,067 households across all eight divisions of the country.

The study found that the proportion of people living below the lower poverty line also increased, reaching 9.35 per cent in 2025 against 5.6 per cent recorded in the 2022 Household Income and Expenditure Survey (HIES).
Inequality has widened alongside the rise in poverty.

The expenditure Gini coefficient increased from 0.334 to 0.436, while urban inequality stood at 0.532, considerably higher than the rural figure of 0.347.

The findings show that 17.97 per cent of households fall into the category of “vulnerable non-poor”, meaning they remain above the poverty line but spend less than the median level.

Together, they represent around 31 million people, many of whom have little capacity to cope with financial emergencies.

More than half of these households have a chronically ill member, yet only 27.5 per cent receive support through social safety-net programmes, leaving a large section exposed to the risk of slipping into poverty.

Household finances are under severe strain. Average monthly income stands at Tk32,685, almost matching average expenditure of Tk32,615 and leaving a monthly surplus of only Tk70.

The bottom 40 per cent of households spend more than they earn, while food alone accounts for 54.9 per cent of total household expenditure.

Presenting the findings, Hossain Zillur Rahman said the economy was caught in a deep and complex structural trap that could not be treated as a temporary setback.

He identified three major dimensions of the crisis: economic hardship at household level; persistent problems in employment and healthcare; and a rising debt burden alongside stagnant investment.

The employment challenge, the study suggested, was not simply a shortage of jobs but a lack of adequate and productive work.

Around 37.7 per cent of working adults worked fewer than 40 hours a week, with the proportion rising to 65.5 per cent among employed women.

Healthcare costs are another major source of financial distress. Medical expenses triggered 67.4 per cent of reported financial crises, while households paid 79.31 per cent of healthcare costs out of their own pockets.

Nearly half of households – 48.9 per cent – reported harassment or informal payments when accessing health services.

Debt has also outstripped households’ capacity to save. On average, household debt exceeds savings by 44.6 per cent, while the gap reaches 218 per cent among households in the poorest decile.

The report also identified a “politico-governance trap” that took hold between 2014 and 2024 and, it said, largely remains in place.

It cited a non-performing loan ratio of 33.2 per cent in June 2026, a tax-to-GDP ratio of below 7 per cent in fiscal year 2024-25 and net foreign direct investment equivalent to around 0.3 per cent of GDP in FY2025-26.

The economic outlook remains subdued. Projections for Bangladesh’s GDP growth in FY2026-27 stand at 3.2 per cent by the International Monetary Fund, 3.4 per cent by the World Bank and 4 per cent by the Asian Development Bank.

Rahman called for comprehensive structural reforms under a framework he described as a “transition compact”, stressing that immediate and effective action at the policymaking level was essential to put the economy on a more sustainable path.

The proposed framework rests on five pillars: economic democracy, new growth drivers, quality education, productive transformation and governance for speed.

The study recommended a sequenced action plan that includes real-time household monitoring, a national skills intelligence system, a resilience floor for vulnerable non-poor households and social safety-net targeting based on vulnerability rather than static poverty classifications.

Also attending the event were Fazlul Haque, administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), and Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD).