NEW DELHI: Electoral democracy in Bangladesh was accompanied by an economic take-off from the early 1990s on the back of a booming garments industry and steady flow of remittances, according to applied macroeconomist Jyoti Rahman.
Rahman, with 23 years of experience with the Australian Treasury, Department of Foreign Affairs and Trade and the International Monetary Fund, is currently the Directorof the International at Sydney Policy Analysis Centre (a diaspora organisation).
In article for Lowy Institute, he said that these economic forces were boosted by infrastructure megaprojects under Prime Minister Sheikh Hasina.
One reason why the flawed elections of 2014 and 2018 were shrugged off by the public might be because for most Bangladeshis, living standards had never been better, the article said.
“These economic good times might be coming to an end. Inequality was rising in the country even before the Covid-19 pandemic, while banking and energy sectors were rife with corruption scadals”, Rahman said.
Since then, inflation has seen the purchasing power of the working poor eroded to levels seen a decade ago. Cost-of-living pressures have seen BNP rallies swell, and labour unrest with demands for higher pay has engulfed the country’s garments sector, notwithstanding violent police measures.
Protests are not new to Bangladesh – the country is famed for strikes known locally as “hartals” that can shut down cities. But with the threat of unrest reaching boiling point before January 7, talk of postponing the election has so far been dismissed.
The economic woes look set to continue. In the past 18 months, the central bank sold more than half of its foreign reserves and still couldn’t stop a significant currency depreciation.
Notwithstanding a nearly $5 billion program with the International Monetary Fund and other financing, the country is expected to run current account deficits into the late 2020s.
External imbalances, a wobbly banking sector, and authoritarian politics make for a volatile scenario, the article said.
Further adding to the risks of instability is Hasina’s age – at 76, there is no succession mechanism or heir apparent in her party.
Bangladesh is a country of 170 million people with a $450 billion economy. The country has for too long been overlooked internationally, but the risk of instability has regional implications. This helps explain why the Biden administration in the US has steadily called for a free and fair for a free and fair, participatory election in Bangladesh. That appears to be wishful thinking, the article said.