From Bottomless Basket to South Asian Miracle: Bangladesh's Economic Surge Amid Political Turmoil

Bangladesh, once dubbed a "Bottomless Basket" by Henry Kissinger, has significantly transformed its economic landscape since its independence in 1972. Despite its tumultuous history marked by coups and political instability, the country is now regarded as a "South Asian Miracle." Bangladesh's economy has demonstrated remarkable resilience and growth, surpassing $440 billion in size and achieving middle-income status by 2015. The nation's per capita GDP soared from under $100 in 1972 to $2,688 in the fiscal year 2022, reflecting a 285% increase from 2009 to 2022, outpacing major regional economies like India.

Prime Minister Sheikh Hasina, who resigned on August 13, had been pivotal in leading Bangladesh through this period of growth. However, her departure highlighted underlying vulnerabilities. Hasina's emotional resignation statement underscored the deep-seated issues of political unrest and societal discontent. Her reference to the country's efforts turning to "ashes" amid recent turmoil pointed to the fragility of Bangladesh's socio-political fabric.

Economic advancements have not precluded Bangladesh from facing formidable challenges. Structural issues such as high inflation, which hit 9.73% for the 2023-2024 fiscal year, and a heavy dependence on garment manufacturing—83% of export revenue—render the economy susceptible to external shocks. The COVID-19 pandemic and the Russia-Ukraine conflict have exacerbated these vulnerabilities, impacting the global supply chain and, by extension, Bangladesh's economic stability.

Moreover, youth unemployment remains a critical issue, with around 20% of the 18-24 age group neither working nor in education. This demographic frustration has fueled recent protests, demonstrating the gap between economic growth statistics and on-the-ground reality for many citizens. The controversial "quota system” for civil servant jobs, providing preferential treatment to certain groups, has been a flashpoint, culminating in Hasina’s resignation. This quota system, deeply resented by many, only partially addressed the broader employment crisis.

Geopolitically, Bangladesh holds significant strategic importance. Its location on the Bay of Bengal makes it a focal point for major global powers like the U.S., India, Japan, and Australia, who view it as central to their Indo-Pacific strategies. The recent political upheavals cast uncertainty over future diplomatic and economic alignments. Hasina's administration had adopted a balanced foreign policy, making the nation a crucial player in regional dynamics. Her sudden exit leaves a vacuum, raising questions about forthcoming leadership and policy direction.

Bangladesh also continues to leverage its strategic relations to enhance its economic prospects. It benefits from duty-free access to European markets and continues to expand its capabilities through partnerships with Chinese companies. However, political instability threatens to undermine these gains and deter foreign investment, further complicating its economic trajectory.

As Bangladesh faces this critical juncture, the international community watches closely. The nation’s ability to navigate these profound challenges while capitalizing on its economic potential will define its role in the global arena and its capacity to sustain the so-called "South Asian Miracle."