On paper, Bangladesh is now a country with a per capita income of $3,000. But to a housewife standing with a shopping bag in hand at the market, or a construction worker counting his wages at the end of the day, this figure means little.
They are doing a different calculation: expenses are rising faster than income. It is a topsy-turvy game. Per capita income rises, yet the number of poor people increases; economic growth stalls, but the state’s debt keeps growing.
According to preliminary estimates by the Bangladesh Bureau of Statistics (BBS), per capita income reached $3,020 for the first time in fiscal year 2025–26. However, that estimate was based on an assumed growth rate of 4.14 per cent. In the revised estimate, growth has fallen to 3.68 per cent.
The World Bank’s latest forecast suggests that economic growth may remain stuck at around 3.4 per cent in the current fiscal year as well. The record in average income, therefore, does not translate into a record in ordinary people’s purchasing power.
The clearest evidence of this is found in the poverty figures. According to the 2016 Household Income and Expenditure Survey, the poverty rate stood at 24.3 per cent. By 2022, it had fallen to 18.7 per cent—one of the most significant achievements in a decade and a half.
However, a newly published World Bank report says that the national poverty rate has risen for four consecutive years, reaching an estimated 22.5 per cent in 2026. At the international poverty line of $3 a day, nearly 2.1 million people fell into poverty in the last fiscal year alone.
In other words, in just four years, we have come close to losing much of the progress achieved over an entire decade. Yet 62 per cent of the country’s poor still remain outside the social safety net.
At the heart of this reversal in poverty reduction lies a shortage of jobs. According to the full report of the Bangladesh Bureau of Statistics’ Labour Force Survey, the country has 2.624 million unemployed people, of whom 2.032 million are young people aged 15 to 29.
In other words, three out of every four unemployed people are young. Nearly 885,000 unemployed people have higher education qualifications. Women’s participation in the labour force has also fallen, from 42.8 per cent in 2022 to 38.4 per cent.
The situation in the industrial sector is even more worrying. According to Industrial Police data, 457 industrial factories shut down permanently in the two years between June 2024 and June 2026, including 170 in the textile and garment sectors.
According to entrepreneurs’ associations, the number exceeds 500. In the garment sector alone, around 150,000 workers have lost their jobs. The reasons are multifaceted, including shortages of gas and electricity, a decline in work orders, complications involving loans and letters of credit (LCs), and labour unrest.
The pressure of rising prices has compounded the jobs crisis. Inflation stood at 8.34 per cent in September, while wages increased by just 7.90 per cent. The outlook ahead offers little relief either. The International Monetary Fund’s October 2026 World Economic Outlook projects that average inflation could rise to 10.9 per cent in the current 2026–27 fiscal year, while GDP growth could fall to 3.2 per cent. If this forecast proves accurate, it would be the lowest growth rate in nearly four decades.
Meanwhile, rising global oil prices due to the war in the Middle East have prompted the government to adjust fuel prices three times in seven months. Since September 21, diesel has cost Tk 135 per litre, kerosene Tk 155, petrol Tk 160 and octane Tk 165, the highest prices in the country’s history. In June, retail electricity prices rose by an average of 16.68 per cent to Tk 10.63 per unit. The price of a 12-kilogram LPG cylinder also increased in October.
The government argues that although prices in the global market have more than doubled, domestic prices have not been adjusted fully. Even so, the Bangladesh Petroleum Corporation (BPC) incurred losses of approximately Tk 22,876 crore between March and August. This argument is not without merit.
However, higher fuel costs feed through irrigation and transportation expenses, ultimately pushing up the prices of rice, lentils, vegetables and fish. Working people cope with the shock by putting less food on their plates, dipping into their savings and borrowing money.
The deepest wound in the economy, however, lies in the banking sector. At the end of June 2026, defaulted loans stood at Tk 606,555 crore, accounting for 32.78 per cent of all outstanding loans. With such an enormous amount of money tied up in defaulted loans, banks are unable to lend to new entrepreneurs. This is also a major reason why private-sector credit growth has fallen below 5 per cent.
Meanwhile, the government’s debt burden continues to grow. According to the Finance Division, in June 2024, at the end of the previous government’s tenure and before the July mass uprising, the government’s debt stood at Tk 18.32 lakh crore.
During the first 14 months of the interim government, the debt increased by approximately Tk 2.6 lakh crore. In the current government’s seven and a half months in office, net borrowing from banks has amounted to around Tk 79,000 crore.
Taken together, the government’s liabilities now stand at approximately Tk 23 lakh crore, a burden that ultimately falls on the people of the country. In the current budget, Tk 1,27,500 crore has been allocated solely for interest payments.
Against this backdrop, relations with development partners have become a major concern. Of the $5.5 billion programme with the International Monetary Fund (IMF), Bangladesh has received $3.64 billion in five instalments. Last June, the IMF announced that Bangladesh had applied for a new programme.
Negotiating the terms and conditions is the sovereign right of any country, and that process is now underway. However, it is important to remember that budget support from the World Bank and the Asian Development Bank (ADB) depends to a considerable extent on the IMF’s assessment.
Another turning point lies ahead on this challenging path to economic growth: Bangladesh’s graduation from the least developed country (LDC) category, scheduled for 24 November 2026. At the government’s request, the United Nations Committee for Development Policy (CDP) has recommended extending the transition period until 2029. The final decision will come during the current session of the UN General Assembly.
In 2018, Bangladesh met the United Nations’ three criteria for the first time: gross national income per capita, the Human Assets Index, and the Economic and Environmental Vulnerability Index. After meeting the criteria for a second time in 2021, the Committee for Development Policy (CDP) recommended the country’s graduation.
However, in the wake of the COVID-19 pandemic, 2026 was set as the graduation year, with a five-year preparatory period instead of the usual three. Following graduation, Bangladesh will be classified as a developing country under the United Nations’ classification system.
In the current circumstances, securing additional time is reassuring, but time alone is not the solution. If this extended period is not used to pursue reforms and improve productivity and competitiveness, and if Bangladesh does not genuinely begin its journey beyond the lower-middle-income trap towards upper-middle-income status and a prosperous economy, the same crisis will return in an even more severe form three years from now.
The government has announced a target of building a $1 trillion economy by 2034. It is an ambitious vision, and the numbers are daunting. To double an economy worth $501 billion in eight years, Bangladesh would need to grow by an average of approximately 9 per cent annually in dollar terms, while real economic growth currently stands below 4 per cent.
The obstacles along the way are becoming increasingly apparent: stagnant investment, uncertainty over gas and electricity supplies for industries, a banking sector burdened by defaulted loans, a tax-to-GDP ratio of just 6.8 per cent, skills shortages, and uncertainty over the value of the taka and price stability. Announcing targets without removing these obstacles will only raise expectations and increase the pressure to deliver.
At the household level, preparation and financial literacy are also essential. These include keeping a simple record of income and expenditure, maintaining a small emergency fund, and avoiding high-interest loans.
Despite facing the same oil crisis, neighbouring India achieved 7.8 per cent economic growth in the first quarter of the current fiscal year, while keeping inflation at around 4.5 per cent. The success of Japan, South Korea, China and Singapore rests on similar foundations: price stability, policy consistency, a skilled workforce and a disciplined financial sector.
The question now is: where do we stand in comparison with these stable economies? A country plagued by various structural weaknesses will inevitably face crises, which may sometimes intensify. There is no denying this. The question is, what should be done to address them?
First, to control prices, action must be taken at the source of rising costs. A transparent, automatic fuel-pricing mechanism is needed to ensure that people fairly benefit when global prices fall, as well as when they rise. At the same time, unwarranted interference in markets and the transport sector must be firmly curbed.
Second, protecting the newly impoverished. The World Bank says that by accurately identifying eligible beneficiaries and coordinating family cards with cash assistance, an additional 2.85 million people could be lifted above the poverty line. An updated social registry is essential to achieve this.
Third, safeguarding industries and employment. Last May, Bangladesh Bank announced a Tk 600 billion stimulus package to revive closed factories, with the aim of creating 2.5 million jobs. The immediate priority is to ensure that this assistance is provided according to transparent criteria and on the condition that workers’ jobs are protected, while guaranteeing uninterrupted gas and electricity supplies to industries.
Fourth, reforming the banking and revenue sectors. The cycle of debt will not be broken without ending the practice of repeatedly rescheduling loans, seizing the assets of wilful defaulters, and raising the tax-to-GDP ratio to a standard level.
Fifth, ensuring policy clarity and consistency. A clear position on issues involving development partners, including the IMF, a medium-term debt strategy, and a roadmap for competitiveness in the post-LDC period could help restore investor confidence.
At the household level, preparation and financial literacy are also essential. These include keeping a simple record of income and expenditure, maintaining a small emergency fund, and avoiding high-interest loans. The countless young entrepreneurs across the country must receive the financial assistance and skills-development support they need to reach their full potential. They should also seek necessary guidance from financial institutions that work with young people.
Debates over who did what and who left behind how much debt may sometimes be politically important or serve as fodder for public argument. But far more urgent is getting the country’s future economic calculations right. The strain of this challenge is becoming increasingly visible every day in the shopping bags of working people, the pockets of salaried employees, and the shuttered factories of entrepreneurs.
There is only one task now: to bring every person in the country within the reach of development and move the nation forward through shared participation. In this topsy-turvy economic game, no single side can win alone; success requires everyone to win together.
There is nothing wrong with dreaming of a trillion-dollar economy. But in an economy where 2.1 million people fall into poverty in a single year and a vast population of young people faces the risk of unemployment, the first priority must be to secure firm footing, and summon the determination and enthusiasm needed to bounce back.
MM Mahbub Hasan is a banker, development researcher and writer.