Professor Dr. Mihir Kumar Roy: On April 22, the World Bank published a report titled Bangladesh Development Update 2025, which highlighted that due to sluggish economic activity and a contracting labor market, around 3 million people in Bangladesh could fall into extreme poverty this year. This forecast is based on the international poverty line. According to the World Bank, anyone earning less than $2.15 per day is considered extremely poor. An increase in the number of poor people implies growing socioeconomic inequality. The Gini coefficient, which measures inequality, may rise from 35.5% to 36.1%.

1. The report mentions that last year, the poverty rate reached 20.5%. The main reasons identified are low economic growth and worsening labor market conditions in 2023 and 2024. Other factors contributing to worsening poverty, as cited by the World Bank, include a weak business environment, law and order issues, declining employment opportunities—especially for women.
2. According to the Bangladesh Bureau of Statistics (BBS), poverty rates over the past three fiscal years were: 18.7% in 2022, 19.2% in 2023, and 20.5% in 2024. The World Bank estimates that by the end of this year, the poverty rate may rise further to 22.9%. However, it predicts a decline in poverty over the following two years, to 20.6% in 2026 and 18.9% in 2027.
3. The labor force participation rate fell from 60.9% to 59.2% last year. A significant reason is the decline in female participation in the labor force, which dropped from 41.6% to 38.9%. During the same period, 2.06 million people in the labor force were out of work—2.01 million of them women. Overall employment fell from 71 million to 69.4 million, with job losses across all sectors. The highest decline occurred in the services sector (2.6%), followed by agriculture (2.3%) and industry (0.8%). As a result, the unemployment rate rose from 3.4% to 3.6%, with 120,000 more people becoming unemployed.
4. In an earlier biannual report titled South Asia Development Update: Taxing Times, the World Bank projected that GDP growth in the current fiscal year might be 3.3%, revised down from the 4.1% forecast in January. For the next fiscal year, the GDP growth rate is expected to increase slightly to 4.9%.
5. One key reason for the downward revision of the growth forecast is uncertainty over the country’s political future. Bangladesh’s economy now stands at a critical juncture. Without reforms in revenue systems, political stability, and the financial sector, growth could slow further. The World Bank has recommended bold and targeted reform initiatives to overcome the crisis.

Bangladesh is a member of the World Bank, and Martin Raiser, the Vice President for South Asia, remarked that Bangladesh will determine its own economic policies, with the World Bank acting as a partner. The World Bank maintains a strong relationship with Bangladesh and will continue to stand by the country. Bangladesh’s development journey serves as a model for many nations.

The World Bank’s Bangladesh Development Update 2025 warns that 3 million people may fall into extreme poverty due to weak economic activity and labor market decline. Poverty and inequality are rising, while job losses, especially among women, persist. The World Bank urges reforms and pledges continued support in energy and development sectors.

Looking ahead, the World Bank is expected to play a significant role in Bangladesh’s electric vehicle and hydrogen power and energy sectors. It could support hydrogen policy development and stakeholder engagement in electric vehicles. The World Bank can also assist in upgrading the Bangladesh Power Management Institute to international standards and strengthen collaboration in wind power, transmission, and distribution systems.

During this time, support is expected in renewable energy, captive power, climate change, global energy crisis, solar irrigation pumps, lithium batteries, hydropower, regional power trade, net metering and rooftop solar, green buildings, efficient and economical use of power and energy, oil refineries, and land-based LNG terminals. According to the World Bank, focusing on skills development, regional cooperation, and energy transmission is highly promising for Bangladesh. The country is shining with the expansion of renewable energy and exploration of new areas of potential. The World Bank has shown interest in supporting these areas.

It is worth mentioning that two projects related to gas meters were approved by the World Bank and began in January 2023. Six projects in the power sector are currently ongoing with World Bank funding.

The World Bank has always believed in structural reform in Bangladesh, and it is hoped that its support will continue in the future.

Author: Professor (Economics), Former Director, BARD (Comilla), Former Dean (Faculty of Business Administration) & Syndicate Member, City University, Dhaka