Inflation, social unrest challenge Bangladesh's 'miracle economy'

Standing in line to try to buy food, Rekha Begum is distraught. Like many others in Bangladesh, she is struggling to find affordable daily essentials like rice, lentils and onions.

“I went to two other places, but they told me they don't have supplies. Then I came here and stood at the end of the queue,” said Begum, 60, as she waited for nearly two hours to buy what she needed from a truck selling food at subsidised prices in the capital Dhaka.

Bangladesh’s economic miracle is under severe strain as fuel price hikes amplify frustrations over rising costs for food and other necessities.

Fierce opposition criticism and small street protests have erupted in recent weeks, adding to pressures on the government of Prime Minister Sheikh Hasina, which has sought help from the International Monetary Fund.

Experts say Bangladesh’s predicament is nowhere nearly as severe as Sri Lanka’s.

But it faces similar troubles: excessive spending on ambitious development projects, public anger over corruption and cronyism and a weakening trade balance.

Such trends are undermining Bangladesh’s impressive progress, fuelled largely by its success as a garment manufacturing hub, toward becoming a more affluent, middle-income country.

The government raised fuel prices by more than 50 per cent last month to counter soaring costs due to high oil prices, triggering protests over the rising cost of living. 

The war in Ukraine has pushed higher prices of many commodities, doubling the effect of the pandemic.

To ease the strain on public finances and foreign reserves, the authorities put a moratorium on big, new projects, cut office hours to save energy and imposed limits on imports of goods.