Bangladesh’s economy has been experiencing a tumultuous phase since 2020 due to a host of challenges. The country’s foreign exchange reserve has fallen by around 60% in less than two years, forcing the government to restrict imports.
The import restrictions have impacted the lives of Bangladeshis in multiple ways.
Inflation has been hovering around 9% for more than a year due to the shortage of supplies in the market and the dysfunctional supply chain. The lack of required fuel caused power plants and industries to function in limited capacities, impacting overall economic growth. In recent months, export growth has seen a decline, and the foreign exchange reserve has become largely dependent on remittances sent by Bangladeshis working abroad.
Over the longer term, Bangladesh has not been able to diversify its export basket and is highly reliant on the ready-made garments (RMG) sector, which contributes 85% of the total exports. Nor has the country managed to attract sufficient foreign direct investments, which is reflected in the low FDI-to-GDP ratio.
On the other hand, Bangladesh’s GINI coefficient is the highest in its history, and the last BBS survey concluded that the richest 10% of the country now earns 40.9% of the country’s total income. The visibly widening inequality is raising concerns about the fairness of economic growth’s distribution.
Experts suggest fiscal mismanagement and poor governance are the proximate causes behind these economic woes. These causes themselves are manifestations of a far deeper problem of lack of accountability, a core component of democracy.
In this context, the second episode of the bimonthly webinar series on Bangladesh by Asia Democracy Network (ADN) and Sydney Policy and Analysis Centre (SPAC) was held on June 4, 2024. The participants discussed the economic challenges of Bangladesh, the possible policies and actions for the upgradation of the economy, how the economic growth can be more sustainable and equitable and the need for accountability and democracy to ensure that.
This brief provides a summary of the discussion.
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