Synopsis
A report from the World Bank indicates that political tensions in Bangladesh under Muhammad Yunus's interim government may worsen due to electoral disagreements, posing risks to economic stability and investment growth. The report forecasts a decline in GDP and an increase in poverty levels.Key Takeaways
- Political tensions may rise due to election timing disputes.
- Projected GDP growth will fall to 3.3% by FY 2025.
- National poverty rate could increase to 22.9% by 2025.
- Three million more people may enter extreme poverty.
- High inflation continues to strain low-income households.
Dhaka, April 24 (NationPress) Political tensions in Bangladesh under the interim government led by Muhammad Yunus may escalate in the future due to disagreements among political parties regarding the timing of elections, according to a report by the World Bank (WB). These issues, the report states, will significantly impact investment growth and disrupt the Bangladeshi economy.
The WB's latest report, titled ‘Bangladesh Development Update’, indicates that real GDP growth is anticipated to drop to 3.3 percent in Fiscal Year 2025, down from 4.2 percent last year and 5.8 percent in FY-2023. The World Bank projects that the national poverty rate will rise from 20.5 percent in 2024 to 22.9 percent in 2025.
The report warns that an additional three million people in Bangladesh are expected to enter extreme poverty by 2025, as the extreme poverty rate is predicted to increase from 7.7 percent to 9.3 percent.
Furthermore, it forecasts that the weak labour market situation will persist this year, with vulnerable populations, particularly those at risk of extreme poverty, likely to experience a decline in their actual income.
“A weak law-and-order situation, a poor business environment, and a lack of job opportunities have discouraged job seekers, particularly women, leading many to exit the labour market,” the report notes.
“Labour market conditions are expected to remain poor, with real wages anticipated to fall across all sectors in 2025. As economic activity slows, vulnerable groups are likely to be disproportionately affected, exacerbating social and economic disparities,” it added.
The report also highlighted that high inflation persists due to supply chain disruptions, elevated energy prices, and increased import costs resulting from the depreciating Bangladeshi currency.
“High inflation and job losses have strained economic welfare, especially for low-income households who allocate a larger portion of their income to essential goods,” the report states.
In addition to economic risks, the report identifies political tensions as a growing concern in Bangladesh.
“Safety and security issues remain and are expected to continue until a fully functional police force is reinstated,” it concludes.
