Published: 10:13 AM, 20 August 2026
Seventeen Years, Three Economic Stories: Bangladesh’s Six-Month Test
Dr. Mohammed A Rab
Six months have passed since Tarique Rahman was sworn in as Prime Minister on February 17. The anniversary has naturally prompted competing assessments. The government highlights economic stabilization, new initiatives and progress on its commitments. Critics cite ongoing weakness in investment, energy, banking and household welfare. Even analysts reviewing the government's own 180-day assessment have argued that performance has fallen short of expectations.
Six months is not enough to repair an economy with deep structural problems. But it is long enough to ask whether conditions are beginning to move in the right direction. To answer that fairly, Bangladesh must first get the history right.
A recurring political narrative treats the preceding 17 years as a single period of economic failure. That characterization is analytically misleading. The roughly fifteen and a half years of Sheikh Hasina's government, the subsequent interim administration, and the first six months of the present government constitute three distinct economic periods. Each inherited problems from its predecessor, but each also produced outcomes that should be assessed separately.
When Hasina returned to office in January 2009, Bangladesh remained a poor, infrastructure-constrained economy. What followed over the next decade and a half was a transformation that should not be forgotten from national memory simply because her government ultimately fell amid a profound political crisis.
Bangladesh sustained rapid growth for much of that period. By 2019, the World Bank described it as one of the world's fastest-growing economies and ranked it among the five fastest-growing globally. The country achieved lower-middle-income status in 2015 and subsequently met the criteria for graduation from the UN's least developed country category. The social transformation was equally important. The World Bank's latest poverty assessment estimates that moderate poverty fell from 37.1 percent in 2010 to 18.7 percent in 2022, while extreme poverty declined from 12.2 percent to 5.6 percent. Some 34 million people escaped multidimensional poverty between 2010 and 2022. Access to electricity expanded to nearly the entire population. School enrollment increased, gender parity was achieved, and maternal and child mortality declined substantially. Physical infrastructure also changed visibly. Electricity generation capacity expanded dramatically. New roads, bridges, and urban transport projects improved connectivity, while projects such as the Padma Bridge and Dhaka Metro Rail became symbols of a country striving to overcome longstanding infrastructure constraints.
These achievements did not belong to a single leader or government. Garment workers, farmers, migrant workers sending remittances, entrepreneurs, women entering the workforce, NGOs, development partners, and millions of ordinary Bangladeshis contributed to them. But public policy, infrastructure investment, electrification, and macroeconomic management also mattered.
International recognition was therefore well deserved. The World Bank described Bangladesh's income growth, human development, and vulnerability reduction as “extraordinary” and later characterized the country's development progress as “remarkable.” In 2023, it observed that a country that had been among the world's poorest at independence had become one of its faster-growing economies.
This is the factual foundation for what was often celebrated as Bangladesh's remarkable development story.
But acknowledging that record does not require romanticizing the Hasina era.
By the later years, serious vulnerabilities had accumulated. Inflation was high, foreign-exchange reserves had fallen sharply from earlier peaks, exchange-rate management had become increasingly difficult, private investment was inadequate, revenue mobilization remained exceptionally weak, and the banking system contained governance failures and bad loans that were not always transparently recognized. The World Bank was already warning in 2019 that private investment and FDI were insufficient and that financial-sector and regulatory reforms were needed.
Political and institutional weaknesses also had economic consequences. Concentrated power, weak accountability, politically influenced banking, related-party lending, and regulatory forbearance imposed costs that became increasingly visible over time. So, in August 2024, Bangladesh was not an economy without problems. It had serious structural vulnerabilities that required difficult reform.
But vulnerability is not the same as collapse.
That distinction is important because what followed August 2024 marked a different economic period. Political disruption, uncertainty, and weak investment, combined with existing macroeconomic problems, produced a sharper slowdown. The World Bank reports that real GDP growth fell from 5.8 percent in FY2023 to 4.2 percent in FY2024, then slowed further.
The social consequences have become increasingly visible. The World Bank now estimates that national poverty rose from 18.7 percent in 2022 to 21.4 percent in 2025. Growth has weakened for three consecutive years, private investment remains subdued, inflation has persisted, and financial-sector stress has intensified.
Not all of this deterioration should be blamed on the interim government. It inherited inflation, reserve pressures, banking weaknesses, and an economy disrupted by political upheaval. It also undertook reforms that deserve recognition. A more flexible exchange-rate regime helped stabilize the taka and rebuild reserves. Remittance inflows strengthened, and efforts to expose previously concealed banking losses made the financial system appear worse, partly because its problems were finally bei+ng recognized more honestly.
Yet stabilization and reform did not prevent the real economy from weakening. Investment remained depressed, job creation struggled, and poverty increased. By the time the elected government assumed office in February 2026, it therefore inherited not only the vulnerabilities that existed in August 2024 but also an economy that had experienced a further period of weak growth and declining household welfare.
That is the inheritance against which the present government should be judged.
Six months later, the picture remains mixed. The World Bank projects growth of only 3.9 percent in FY2026, with inflation around 8.5 percent. Private credit growth has stayed exceptionally weak, reflecting cautious banks and subdued investment demand. Bangladesh Bank has begun cautiously easing monetary restraint, but cheaper money alone cannot restore investment when banks remain impaired, and businesses remain uncertain.
The government has taken some potentially constructive steps. It seeks to consolidate investment-promotion agencies under a proposed Invest Bangladesh framework and emphasizes attracting foreign investment, trade, and technology. There are positive signals from the external sector. Strong remittances and exchange-rate adjustment have helped rebuild reserves and ease some external pressure. These gains should be protected. But reserves are not a substitute for investment, and remittances cannot, by themselves, generate the productivity growth and formal employment Bangladesh needs.
The fairest standard for a six-month-old government is therefore neither whether it has solved every inherited problem nor whether it can continue to attribute every disappointing outcome to its predecessors. The appropriate test is direction.
Are businesses becoming more willing to invest? Is private credit beginning to recover? Is energy becoming more reliable? Is inflation moving sustainably downward? Is banking reform creating stronger institutions rather than merely reorganizing troubled banks? Is policy becoming more predictable? Are investors becoming more confident that contracts, property, and businesses will be protected?
These questions matter more than competing claims over who inherited what.
Bangladesh should also resist rewriting its economic history to serve current political needs. The Hasina government should be held accountable for the serious institutional, banking, and macroeconomic weaknesses that accumulated under its watch. But those failures do not erase fifteen years of substantial economic and social progress. Likewise, the interim government deserves credit for necessary corrections, particularly in exchange-rate and banking reform, but those measures do not erase the deterioration in growth, investment, and poverty that occurred during the transition.
The same principle must now apply to the Tarique Rahman government.
Six months is too short to rebuild an economy. But with each additional month, inheritance becomes a less sufficient explanation, and performance becomes a more legitimate measure of government.
The challenge for the present government is not to win the argument about the past. It is to ensure that Bangladesh resumes growth, that investment returns, that jobs are created, and that the development momentum once recognized internationally is rebuilt on stronger institutions than before.
Mohammed A Rab is a US-based economist and a freelance
consultant on financial
risk management.
