By the point a student-led protest motion erupted right into a full-scale revolution in Bangladesh in July 2024, the rustic’s economic system was once already in loose fall.
Years of rampant corruption, mismanagement and dwindling alternatives for younger folks – to not point out the brutal repression of its then-autocratic govt – had left the rustic’s monetary establishments on their knees.
The banking device teetered getting ready to cave in beneath the burden of huge unhealthy loans and capital flight. In the meantime, overseas reserves dwindled because of a worsening industry deficit and declining remittances from Bangladeshi migrant staff in a foreign country.
The speedy aftermath of the toppling of autocratic chief Sheikh Hasina after 36 days of protest urged that the rustic’s new leaders confronted an unenviable activity righting the economic system. Regulation and order disintegrated, as massive segments of the police and different legislation enforcement businesses — loyalists of the overthrown govt — disappeared into hiding.
In the meantime, a number of movements of India, Bangladesh’s robust neighbor and primary buying and selling spouse, additional destabilized an already risky scenario. The federal government in New Delhi, which have been on the subject of the Hasina govt, started exerting financial, political and diplomatic force on Bangladesh after offering shelter to a lot of leaders and activists from the deposed management, together with Hasina herself.
Regardless of this gloomy image, alternatively, issues glance brighter a 12 months on. As a professional on world economics and Bangladeshi politics, I consider Bangladesh has accomplished a exceptional stage of monetary and political balance throughout Dr. Muhammad Yunus’ caretaker govt. But huge home and world demanding situations persist and can want cautious dealing with within the months and years yet to come.
Charting financial and political balance
On the urging of the scholar leaders main remaining 12 months’s protest motion, Yunus become the de facto chief of Bangladesh’s meantime govt on Aug. 8, 2024.
The 2006 Nobel laureate, famend for his pioneering paintings in microloan and social industry, shaped a transitional management comprising technocrats, civil society leaders and scholar representatives.
Its mentioned objectives had been restoring order, organizing loose and honest elections, enforcing democratic reforms and bringing duty to these accountable for the killings of political activists throughout Hasina’s reign.
Protesters shout slogans as they have a good time High Minister Sheikh Hasina’s resignation in Dhaka, Bangladesh, on Aug. 5, 2024.
AP Picture/Rajib Dhar, Report
At the monetary entrance, the rustic’s central financial institution – beneath the brand new management of a former IMF economist appointed via Yunus – has effectively steadied the banking sector thru a chain of painful however crucial reforms, together with adjustments to financial coverage and a restructuring that noticed replacements of forums of eleven afflicted banks.
Emerging export income and larger remittances have helped stabilize overseas reserves, which climbed from US$20.39 billion as of July 31, 2024, to over $31 billion on the finish of June 2025.
This restoration is especially placing for the reason that the rustic controlled to rebuild its reserves whilst similtaneously settling remarkable import arrears and servicing the really extensive overseas debt burden inherited from the former govt.
The Yunus govt has additionally introduced larger balance to the home economic system via lowering inflation from 12% in July 2024 to 9% in Would possibly 2025 and attaining a GDP expansion charge of three.9% in 2024-25 thru higher macroeconomic control.
In fresh months, the meantime govt has additionally been in a position to curb the affect of robust and politically attached industry cartels that for years have in large part managed the costs of crucial items and services and products. Partially that is because of felony motion towards corrupt industry leaders and enhanced oversight via meals inspectors.
Even throughout the Muslim fasting month of Ramadan, generally a length of sharp value will increase, maximum customers skilled no surprising surge in the price of necessities reminiscent of rice, fish and poultry. Costs additionally remained solid throughout the Eid al-Adha, the second one biggest Muslim non secular pageant, marking a notable departure from earlier years when pageant sessions introduced dramatic value spikes.
The Yunus govt has additionally scored some key diplomatic successes. In a while after a March 2025 consult with via U.N. Secretary Basic Antonio Guterres, Bangladesh secured a landmark settlement with Myanmar beneath which the latter agreed to repatriate some 180,000 Rohingya refugees who’ve been dwelling in Bangladesh since fleeing a central authority crackdown of their hometown in 2017.
Bangladesh has additionally observed marked enhancements in numerous bilateral relationships, together with with China, its major buying and selling spouse. Given ongoing India-China tensions, the India-backed Hasina regime evaded deepening its dating with China to its complete doable.
Her departure has freed Bangladesh to pursue industry with Beijing extra aggressively. All over Yunus’ reputable consult with to China in March 2025, Bangladesh secured a pledge for a $2.1 billion mortgage from Beijing.
That settlement mirrors quite a lot of different mortgage agreements Dhaka has struck with world collectors in 2025, together with with the IMF, the Asian Building Financial institution, the Jap govt and a $850 million mortgage from the Global Financial institution for enhancing task coaching, improving social protections and extending industry capability.
All informed, the ones offers constitute billions in essential budget for finances beef up and infrastructure.
And the rustic continues to pursue different road of investments. In April it hosted a summit that drew over 400 individuals representing world fund managers, multinational companies and oil-rich Center Jap countries and secured funding pledges of $260 million.
Along promise, the remainder perils
Regardless of the growth, there stays a slew of interior and exterior demanding situations that threaten the rustic’s short- and long-term financial potentialities.
For one, the law-and-order scenario stays fragile. In the meantime, political events together with the Bangladesh Nationalist Celebration, the rustic’s biggest birthday party, are resisting the meantime govt’s reform schedule and important speedy elections.
Spotting that any good points no longer secured thru a functioning democratic and felony device usually are short-lived, the Yunus govt has introduced a highway map for normal elections via no later than April 2026.
Any other primary problem has been looking to get better $234 billion of belongings laundered via bureaucrats, politicians and industry tycoons related to the fallen regime. The whole exceeds the rustic’s general overseas debt. However the meantime govt has but to protected significant cooperation from key international locations, together with the U.S., United Kingdom, UAE, Canada and Singapore, the place a lot of this cash is assumed to be invested in actual property and monetary markets.
Exterior pressures compound those home demanding situations. India High Minister Narendra Modi has followed an an increasing number of competitive stance towards Bangladesh, canceling airport transit amenities for Bangladeshi exporters, banning imports of Bangladeshi merchandise thru land borders and postponing visa issuance for Bangladeshi vacationers.
The Indian govt has additionally intensified deportations of alleged “illegal Bangladeshi migrants,” lots of whom are reportedly Muslim Indian electorate.
Trump’s price lists may turn out disastrous for Bangladeshi exports reliant on garment factories like those.
AP Picture/Mahmud Hossain Opu
After which there’s the U.S. beneath Trump.
Washington’s transfer to cancel nearly all of U.S. overseas help is already impacting more than a few sectors in Bangladesh, in particular well being care. Extra considerably, the imposition of 35% further price lists on Bangladeshi imports threatens catastrophic injury to the economic system, particularly the the most important textile and garment sector, for the reason that the U.S. is Bangladesh’s number one export marketplace. Even though Bangladesh is these days keeping bilateral industry negotiations with the U.S. to avert steep price lists, the risky industry insurance policies of the Trump management might create critical long-term making plans difficulties for Bangladeshi companies.
Whilst overcoming those demanding situations could be ambitious beneath any instances, the Yunus govt’s final luck depends upon 3 interconnected targets: undertaking loose, honest and inclusive elections adopted via non violent energy switch; enforcing the suggestions of more than a few reform commissions to give a boost to financial and political foundations; and turning in justice for sufferers of the former govt’s persecution.
Attaining all 3 satisfactorily will likely be extremely tough. A 12 months in, Yunus has proven a exceptional skill to climate tough instances. However what occurs subsequent will possibly be decided via each home and world components out of his keep an eye on.
