A Game of Shadows: Growth, Distribution, and Systemic Shocks in the Bangladesh Economy

• Soumya Bhowmick

  Bangladesh was one of the few countries in the world to sustain a positive economic growth rate during the COVID-19 pandemic. Today, however, it is experiencing symptoms that could stall such impressive record: rising divergences in the government’s fiscal balance; the precarious Balance of Payments situation; rapidly declining foreign exchange reserves; demand-supply gaps in the energy markets; and inflationary tendencies. The exogenous shocks arising from the pandemic and the Russia-Ukraine war are revealing the country’s financial vulnerabilities, and in July 2022 the country was forced to seek a precautionary loan of US$ 4.5 billion from the International Monetary Fund (IMF). This paper raises the red flags on these interconnected macroeconomic and development parameters, while outlining the inherent strengths in the Bangladesh economy that could yet determine its growth story in the decades to come.