THRESHOLD TRANSITION

Since its hard-won independence in 1971, Bangladesh has navigated numerous challenges, with its future now reliant on peaceful power transition, balanced ties with neighbours including India, and its commitment to democracy and secularism

- DIPANKAR DEY

The interim government of Bangladesh, headed by Nobel laureate Muhammad Yunus, was sworn in on August 8, 2024, after the elected Prime Minister Sheikh Hasina fled to India on August 5, as thousands of citizens had hit the streets demanding her resignation. Since its formation, the interim government has faced three major challenges: (i) stabilizing the economy amid severe political unrest; (ii) careful navigation to avoid potential hindrances as Bangladesh is poised to graduate from a Least Developed Country (LDC) to a developing country in 2026; and (iii) developing good relations with its two neighbors, Myanmar and India.

Economic recovery

After six months of political turmoil since July 2024, it appears that Bangladesh has successfully stabilized its economy. Though in the first quarter (July-September) of the 2024-25 fiscal year (July-June), the GDP growth rate dropped to 1.81 percent, the lowest in nearly four years, GDP grew at a moderate rate in the next two months. Overall inflation decreased to 10.89 percent in December, compared to 11.38 percent in November, and food inflation decreased to 12.92 percent in December from 13.8 percent in November.

Referring to data from the Export Promotion Bureau (EPB),