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Tuesday, September 26, 2023

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Bangladesh’s economic miracle at stake

smallsqueeze in three Bangladesh is adjacent to India and fourth to the Bay of Bengal. It is the eighth most populous country in the world. It is not only a highly acclaimed development model, but also an important regional economy. It has made remarkable social and economic progress since the brutal war for independence from Pakistan in 1971.

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Pool table flats on the floodplains of some of Asia’s largest rivers, in a country once synonymous with poverty, famine and natural disasters. Today, with a population of 170 million people thanks to shelters and early warning systems, the devastating human toll of hurricanes is a thing of the past. The same goes for widespread food shortages. Child mortality is slightly above the global average and half that of Pakistan. The female literacy rate, which was abysmal not so long ago, is now 73%. The percentage of women in paid work has climbed from 4% at independence to 35%, thanks in large part to a booming clothing industry.

In the decade before covid-19, Bangladesh’s average annual growth rate was 7%, only slightly behind China.it is gross domestic product At market prices, that’s about $2,500 per person, higher than in India.Expected to graduate in United NationsRanking of least developed countries (least developed countriess) At the end of 2026. It aims to become an upper-middle-income country by 2031.

Yet hard-won optimism about Bangladesh’s trajectory is being tested. The pandemic and Russia’s invasion of Ukraine have dealt a severe economic shock to the country. It is beset by a cost of living crisis. In one manifestation, this winter, the streets of the crowded capital Dhaka were filled with homeless people wrapped in thin shawls. The other is at the central bank, where the country’s foreign exchange reserves have dwindled alarmingly.

On the political front, elections will be held early next year. The results are indisputable: the increasingly authoritarian prime minister, Sheikh Hasina, has done everything in her power to crush the opposition. Yet her zero-sum approach to politics has fueled tensions that are likely to spark violence as the vote approaches. The opposition Bangladesh Nationalist Party (Bangladesh Nationalist Party,bnp) are already on the street. Meanwhile, the stench of corruption in Dhaka is as pungent as the capital’s polluted air. Instead of stepping into a bright future, Bangladesh seems to have lost its way in key ways.

The energy and hustle and bustle of Bangladeshis is still on display in malls and factories in Dhaka and beyond. This dynamism is the engine of the country’s unexpected success. After the war, many returned from abroad to help rebuild.one started a charityblack, Focus on women’s and children’s health, open schools and set up microcredit schemes. non-governmental organizations has worked wonders in promoting gender equality, which in turn has improved many social, health and economic outcomes.Some developing countries, including India and Pakistan, believe that non-governmental organizationas a political threat. Bangladesh’s overwhelmed government took them in.Now BRAC Export success, providing services in Asia, Africa and the Caribbean.

Two fifths of the population still work on the land. However, roads built by the World Bank and others have connected villages to towns, boosting local markets for produce. The garment industry that is emerging around Dhaka is world class. The government helped by removing tariffs and outdated labor laws.

Since taking power in 2009, Sheikh Hasina has sought to fuel a new phase of growth by investing heavily in infrastructure. Power has long been unstable. Traffic congestion and air pollution are severe in the capital. Crossing river country is a challenge. But last year, the opening of a gigantic road (and soon rail) bridge across the mighty Ganges over Bangladesh’s main canal, the Padma River, changed the country’s economic geography. In Dhaka, a Japan-backed elevated subway and a new airport terminal are under construction. Power plants are being built everywhere. Much of this construction will only exacerbate congestion in the short term. In the long run, the bottleneck should ease.

Despite such apparent progress, foreign diplomats, independent analysts and even thoughtful members of the ruling Awami League (Al) privately expressed serious concern. They run along several dimensions of economics and politics, although they are all related. One is the vulnerability of the balance of payments. Another is an overreliance on the clothing industry. On top of that are serious concerns about governance. A web of state seizure and decline has spread through the country’s institutions.

These weaknesses have been exposed by a series of familiar dilemmas, including rising fuel and food prices and capital flight to developing countries from the war in Ukraine. Bangladesh’s foreign exchange reserves have fallen to less than $30 billion.Last year, the government called for International Monetary Fund as a precautionary measure. In January, the two sides agreed to a $4.7 billion loan. However, the local currency, the taka, remains volatile. As the government restricts imports, in part by doubling down on necessary inspections and permits, exporters are finding it difficult to bring in the foreign inputs they need. They are also trying to get hard currency to back the letter of credit. Without these, they cannot trade.

The apparel industry poses longer-term concerns. Fahmida Khatun of the Center for Policy Dialogue, a Dhaka think tank, said over-reliance on it was a “serious weakness”. The future of the industry is uncertain.graduated from least developed countries Status would mean losing some tariff exemptions in western markets. Lower-cost producers such as Cambodia and Ethiopia are threatening to take as much market share as China from Bangladesh.

Other export industries struggle to grow. Bangladesh is not part of any major regional trade agreements. It has attracted few other types of products to be diverted out of China. While some domestic industries, such as pharmaceuticals and electronics, have potential, they are held back by dire bureaucracy and uneven tariffs.this Economist Intelligence Unit, sister company economistout of 17 Asian countries, Bangladesh’s business environment ranks 15th.

This is the country’s top concern. Its dire governance touches nearly every corner of the country’s affairs – even external accounts. Bangladesh’s wealth and corruption make it a world leader in money laundering. Bangladeshis have a slang term for the upscale areas in Toronto and other western cities where the rich keep their money: begum paraor “Start [”high-ranking woman”] field”. The country’s balance of payments would be even worse if it weren’t for an army of 10 million, mostly poor Bangladeshis, toiling in the Gulf, Southeast Asia and elsewhere, and sending money home.

Business and politics are linked. Bad loans have risen, thanks to banks’ preference for people with political ties to loans they don’t repay. A powerful cabal of politicians, bureaucrats and security services extorts fees that are a down payment on getting anything done – from dodging unfair traffic fines, to winning government contracts, to joining the Coast Guard, to applying to become a primary school teacher. Far from being valued as they should be, these overseas remittance workers are often swayed when it comes to emigrating.

Sheikh Hasina claims she is fighting corruption. In fact, the country is rotting from the ground up. She built a personality cult around her late father, the country’s independence hero Sheikh Mujibur Rahman, and herself. Her patronage system and demands for loyalty have cemented her power while undermining independent institutions.Police and courts are for the people Al and his cronies. Media is not free. Dissidents were jailed; some were murdered.Even on a bustling university campus Al Through its megalomaniac and sometimes violent student wing, reigns with fear. A first-year undergraduate said he had to court his supervisor to get a dorm. Bright young Bangladeshis say they are eager to emigrate.

Sheikh Mujibur had previously tried to make Bangladesh a one-party state, but in 1975 he and most of his family were assassinated. His daughter is almost done. This is the backdrop for the upcoming election. Sheikh Hasina long ago abandoned the practice of holding elections under an impartial caretaker government. so, Al Results can be more easily controlled.

chief rattle and roll

With her arch-rival Khaleda Zia and her party under house arrest, bp, It is well known that the results of the election are already known.However French national bank, now more brutal than when he was in power, has recently recovered enough to launch mass protests in Dhaka. It increases the risk of mob violence and deepens political divisions.

This is just one of several worrying scenarios. Sheikh Hasina, 75, has yet to name a successor. Younger family members lack the experience or willingness to take over. If the prime minister had a stroke tomorrow, the country could be thrown into chaos.

Not everything is doom and gloom. What impresses any visitor is how helpful and relentless the young Bangladeshis look to solve problems themselves. One Dhaka observer said their country was “a country of side jobs”. People run e-commerce businesses from their bedrooms. A journalist raises a dozen buffaloes on the outskirts of the capital and supplies mozzarella to upscale pizzerias. Over dinner in these places, people talk about their desire for a better, more representative Bangladesh, one that provides opportunities instead of taking them away. At the moment, though you are taking a risk by saying this in public, the main obstacle for the future is an opportunity-wasting institution presided over by their Prime Minister.

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