Bangladesh’s economic rise and the new crisis, in charts

However, as Hasina retained power, election after election, Bangladesh started witnessing democratic backsliding, signs of economic stagnation, and discontent grew among a large part of the population. This ultimately culminated in a massive protest that forced Hasina to resign from the government after 15 years and flee the country earlier this week.

Bangladesh capitalized on the availability of labour to produce garments at cheaper rates and became an exporting hub, with the sector making up about 85% of its total exports. The country became a champion of an exports-led growth story as it recorded an impressive assent. A smaller and younger country compared to both India and Pakistan, Bangladesh left both of them behind in terms of per capita income. The country also managed to reduce its poverty rate from 11.8% in 2010 to 5% in 2022, based on the World Bank’s $2.15-a-day poverty line.

However, in recent years, the country started experiencing the limitations of that very exports-led growth story. Exports as a percentage of gross domestic product (GDP) peaked in the early 2010s and has been on a downward trend since then, suggesting that the country needed to re-invent itself beyond exports, particularly garments-led exports. The country in recent years faced stagnation in the economy, soaring inflation, shrinking dollar reserves, and rising unemployment, among other issues.

Political pivot

Sheikh Hasina, the daughter of Bangladesh's founding leader Sheikh Mujibur Rahman, has been in power consistently since 2009: a period that also marked the country’s economic transformation and political stability. However, Bangladesh’s economic turnaround met with mass political unrest as Hasina’s governance began appearing dictatorial and elections were seen internationally as a mere formality. At the core of the turmoil is the country’s jobs crisis. With unemployment on the rise, the proposed 56% reservation for the families of freedom fighters in government jobs did not sit well with the masses, which snowballed into a bigger protest.

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However, discontent over unemployment and jobs quota wasn’t the only reason: it met with a series of massive crackdown on civil liberties. Hasina won the national election earlier this year for the fourth consecutive term but with a voter turnout of just about 40% (in comparison, the voter turnout in 2018 was over 80%). Moreover, Hasina was accused of heavy crackdown on the Opposition ahead of elections, leading to fears of turning the country into a one-party rule.

The democratic backsliding was visible in the World Press Freedom Index, on which Bangladesh’s rank has declined steeply in the recent decade. In May this year, Bangladesh was categorized as a “crisis" country by the Global Expression Report, which tracks freedom of expression in countries.

For better or worse?

Amid the political chaos, the country has taken steps to bring normalcy after Hasina left. Nobel Prize winner and Hasina’s long-term critic, Muhammad Yunus, has been chosen to run an interim government until fresh elections are held. Yunus is celebrated for his work in microfinance that helped alleviate poverty in the country.

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However, the fate of Bangladesh is currently shrouded in uncertainty, with several Indian companies such as Emami, Marico, Dabur, and VIP set to face disruptions. Global garments companies such as H&M, Zara, and Levi Strauss are also likely to be impacted.

While it is not clear whether the political turmoil will lead to long-term impact or only short-term disruptions, the story of Bangladesh shows that economic progress is only one part of democracy; civil liberties and equitable opportunities for all citizens, particularly in a country with remarkable demographic dividend, are essential, too, for ensuring sustainable progress and stability.