Bangladesh’s economy is in extreme crisis, and people can no longer find a way to survive – The Financial Daily

Monirampur Upazila lies in the country’s southwest, about 250 kilometers from Bangladesh’s capital, Dhaka. In 2024, the area was hit by flooding. Now, as the time to harvest the late-autumn paddy-the Aman crop-approaches, the situation is bleak. Mahibullah, a marginal farmer from the area, says the government has no time to think about people like them. “We have no idea what they actually do for ordinary people like us,” he says. “Last year, there was a flood; the government did nothing for us. This year I harvested early, but even then, the price at which I’m being forced to sell my paddy won’t recover my production costs. Meanwhile, the prices of everything else are high.”
Is this situation only a matter of the past year, or was it the same before? When asked such a question, he seems afraid to answer. Then, after a long sigh and a cautious look around, he says, “Whatever the past was, at least we could manage. There was work. Now we can’t get by anymore.”
There was once a saying about the capital, Dhaka: Money flies in the air here. During the off-season in the villages and before the two Eids, Dhaka’s streets used to fill with rickshaws. For a certain class of villagers, coming to Dhaka to pull a rickshaw was an easy way to earn a little extra income for Eid expenses and beyond.
There are also permanent rickshaw pullers-those who have lived in Dhaka for ten or fifteen years, sending money back home to support their families. Many rent rooms in the city’s slums and live with their families there.
Rashid from Rangpur has been pulling a rickshaw in Dhaka for fifteen years. He even joined the movement to topple Sheikh Hasina’s government. Asked why, he says people had told him Sheikh Hasina sent all the money from Bangladesh’s banks abroad. They also told him that Indian trains would run through the country and India would take away all their goods, causing prices in Bangladesh to rise. “We have to stop that,” they told him.
He continues, “After going with the students for a few days, I saw Sheikh Hasina’s government fall. But now what I’m seeing is that without importing onions, rice, and even green chilies from India, we have no way to survive. This week I’ve only bought 500 grams of onions because the price is 120 taka per kilo.”
When asked whether his income has increased, he replies, “You people are educated; you don’t understand the condition we’re in. Before, even after paying the owner’s rent and the rickshaw’s garage fees, I would have 1,500 taka left at the end of the day. Now I’m left with 300 or 400-some days only 500. Rice is 60 taka, onions 120 taka. Fish is impossible to touch; even poultry costs over 200 taka a kilo. A five-member household-what option is there except death?”
Before COVID-19, Bangladesh had the strongest economic growth trajectory in South Asia. Despite being a small country, Bangladesh even lent 200 million dollars to Sri Lanka in 2021 after the pandemic, entering the list of donor nations. But when the real post-COVID economic shock emerged around 2023, the country was forced to seek IMF budget support once again.
At present, the IMF has suspended further disbursements of that budget support loan. They have informed the government of Bangladesh that they will release the remaining portion only after discussions with a stable, succeeding government, since they consider the current interim government unstable.
But even IMF loans cannot rapidly reverse Bangladesh’s current economic condition. The core pillars of the economy may not have collapsed outright, but they are undeniably damaged.
For instance, Bangladesh’s primary source of export earnings is the garment industry. According to the Bangladesh Garment Manufacturers’ Association, since the interim arrangement took charge, 356 factories in two of the main garment zones-Savar and Gazipur-have shut down. As a result, 104,000 workers have officially become unemployed.
But beyond this official figure lies another reality. Most garment factories in Bangladesh employ a significant portion of their workforce on contract. Because of this, they do not have to pay them in accordance with the government’s wage board. No one keeps track of how many contract workers lose their jobs. Their numbers are not small.
In addition, for every one of these 356 factories, there are roughly an equal number-or, in many cases, even more-small, unregistered subcontracting garment units tied to it. These subcontractors take orders from the larger factories. Because they are unregistered, they can pay workers even lower wages. As a result, a huge number of people work in these satellite units. Given this reality, if 104,000 workers from the 356 registered factories have become unemployed, then it can be said that at least another 104,000 workers employed in the associated unregistered subcontracting units have also lost their jobs.
Beyond garments, workers have been laid off in sectors that export synthetic shoes and leather footwear. Workers have also lost jobs in the plastics, ship-breaking, cement, construction, and agro-based industries. For example, a major market for Bangladesh’s agro-based products had been the Seven Sisters region of India. Due to India’s closure of land ports and the imposition of strict restrictions, Bangladesh has lost a large portion of that market. As a result, workers in these sectors have also become unemployed. Moreover, as people’s purchasing power has declined, the number of consumers has dropped. Consequently, workers have been laid off in various shopping malls across the country. They, too, add up to a significant number.
Thus, in Bangladesh, from agricultural laborers and farmers to rickshaw pullers in cities, many have entered a state of disguised unemployment. At the same time, workers in garments and agro-based industries have become fully unemployed. A few examples of garment workers losing their jobs have been mentioned here.
Meanwhile, research by one of Bangladesh’s foremost economic research institutions, BIDS, shows that in the past year alone, 3 million people have fallen below the poverty line. At the same time, the number of educated unemployed has risen to 1.3 million. Despite repeatedly holding Public Service Commission exams, the government has been unable to meaningfully address this because opportunities for government employment are extremely limited.
On the other hand, the private sector, which had grown over the past three decades and developed substantially over the last ten years, is now drying up. The declining rate of private-sector borrowing from banks and the steep drop in capital machinery imports attest to this decline.
Over the past year, private-sector loans have fallen by 6.5%. Imports of capital machinery have fallen by 25%. These indicators suggest that the private sector is no longer creating job opportunities the way it once did.
Furthermore, sovereign bond purchases have decreased by 6,000 crore taka. And foreign direct investment has dropped by 22%. The interim government claims a 19% increase-an accounting illusion. In reality, the government simply did not allow multinational companies to repatriate their profit shares abroad this time. Those retained profits are being counted as foreign investment. But in practical terms, FDI has fallen by 22%.
Meanwhile, the manner in which five banks are being merged in the name of reform has created anxiety not just in the banking sector but also in the stock market.
Banking is an extremely sensitive industry-everyone in the world acknowledges this. Banking depends on trust. To undertake reforms or cover losses, a government must proceed very cautiously. Force and publicity backfire here. While trying to manage the narrative, the governor of the Bangladesh Bank stated that 28 banks are sick. Yet he did not name those 28. As a result, people are now suspicious of every bank. Deposits are shrinking, while many customers feel a quiet pressure to withdraw their money.
Regarding the five banks selected for merger, the central bank has announced that the investments of small shareholders-those who bought shares in these banks-and those of sponsor shareholders are now zero. This is not only illegal but harmful for the overall economy. Because now, anyone holding shares in other banks will rush to sell them at whatever price they can get. This will make it impossible to stop the stock market from collapsing.
As a result, on 13 November, when Chief Adviser Mr. Yunus declared in his speech that all indicators of the country’s economy were trending upward, the stock market index was at its lowest point in history, -122.
Meanwhile, to artificially keep the dollar market under control, the central bank is regularly buying dollars from the market. The consequences of artificially propping up the dollar market need no explanation. Whatever it may be, such a system does not align with real capitalism.
In Bangladesh, the late-autumn season usually brings an abundance of fish and vegetables. Even so, both remain out of reach for ordinary people. Due to these prices, inflation now stands at 8.36% according to some calculations and above 9% according to others.
The earlier portion of this article attempted to show how this inflation affects the poor. But the ordinary middle class and lower-middle class are facing their biggest crisis in meeting their families’ protein needs, affording children’s education, and covering medical expenses for the elderly.
Only 18 months ago, the country that astonished South Asia as the torchbearer of economic development was now a place where people could not find a way to survive. And no one with practical economic expertise believes there is a quick way out of this crisis.