Prothom Alo :
Where does Bangladesh's economy currently stand? What are the biggest concerns and hopes in the current situation?
Zahid Hussain: Bangladesh's economy is in a fragile state, as evidenced by recent reports and surveys from entities like the World Bank, IMF, and PPRC. One of our most significant development achievements was reducing poverty, but now it is going in the opposite direction. Both the number and rate of poor people are rising. If significant changes are not made, this trend is likely to continue in the coming days.
Growth is also weakening. Inflation is rising, and even when it's not increasing, it remains at a high level. Real wages are decreasing, and there is no significant increase in employment. To understand what the economy is ultimately delivering to people's lives, we need to look at these issues. In those areas, the situation is not good.
Nonetheless, there is room for hope. The public uprising in July 2024 demonstrated that people do not accept tyranny indefinitely. Despite differing opinions, people can organise with a common goal and bring about change. It has set a real precedent for demanding accountability against misrule. Someone may evade accountability for a few years, but ultimately, they have to face the people.
The potential for a new political settlement that the public uprising created has not yet been realised. There are also instances of disappointment. Still, we cannot underestimate the power of people's ability to organise. This capability has played a role in our past development. Despite various adversities, life expectancy has increased, poverty has decreased, and industrialisation has occurred. There was once a major concern about whether food could be provided for seventy million people. Significant changes have taken place in agriculture, allowing food to be provided for many more people. Despite adversity, Bangladesh can bring about change, and that is the greatest source of hope for me.
What kind of economy do we want to build in the next 10-15 years, and what preparations are needed starting now?
Zahid Hussain: Even after 55 years of independence, a significant portion of the population remains poor or at risk of poverty, which is deeply concerning. Freedom from economic inequality was one of the aspirations of the liberation war. Leaving so many people in uncertainty after so many years is not consistent with that aspiration. At one time, our concern was that poverty was decreasing at a slow pace. Now, the concern is even greater because poverty is increasing. If asked about future goals ten years ago, I might have said we aim to reduce poverty significantly in the next decade. Today, I still have to speak of the same dream.
The goal for the next 10-15 years should be to significantly reduce poverty and provide economic security to people above the poverty line. Just getting above the line is not enough; they should not fall below it due to illness, job loss, or other shocks. For this, two things need to happen simultaneously: per capita income must increase, and income inequality must decrease. If inequality continues to rise alongside income growth, the lower-income population will not gain sufficient benefits. Conversely, merely altering distribution without increasing income will limit opportunities for improving everyone's life standards.
To achieve this, employment, productivity, and real wages must all increase. Simply increasing the number of jobs is not enough; productivity and incomes of workers in those jobs must also increase. The benefits of productivity growth need to reach workers.
This connection needs to be established in all sectors, including agriculture, industry, and services. From our experience, employment has increased in some places without a corresponding rise in productivity, while in other areas, productivity has increased but job opportunities have decreased. Addressing this disconnection should be a key focus of future planning.
The garment industry, remittances, and agriculture are considered major strengths of Bangladesh's economy. Will these be sufficient to sustain our progress in the future? Where do you see new possibilities?
Zahid Hussain: These three sectors are the main pillars of Bangladesh's development, but relying solely on them in the same way as before will not suffice in the future. Alongside leveraging their potential, the economic foundation needs to be expanded further.
The apparel industry still holds significant opportunities, with untapped potential in accessing new markets and product diversification. However, the advantage we have been competing on, cheap labour, faces challenges from artificial intelligence and new technology. Thus, other industries need to be developed. Discussions have long revolved around the potential of sectors such as leather goods and light engineering, yet we have not been able to realise these possibilities to the expected extent.
Agriculture is of utmost importance for food security and for safeguarding livelihoods during crises. Many resorted to agriculture, returning from cities to rural areas during the pandemic. However, there is no scope for increasing agricultural land, as urbanisation and infrastructure reduce arable land. Hence, it is unrealistic to expect significant economic expansion solely through agriculture.
In terms of remittances, increasing the number of workers overseas has its limitations. Here lies the new opportunity of changing skills. Demand for various jobs is emerging in regions like Japan and Eastern Europe, including care for the elderly, beyond the Middle East. Skilled workers must be developed to meet these demands.
Another great possibility lies in the modern service sector. Our youth, even from villages, work online in international markets from within the country. This initiative has been developed on a limited scale, but if the requisite education, skills, and infrastructure are established, it can grow significantly. Therefore, there are three major paths in front of us: diversifying exports, building skills according to domestic and international demands, and entering the international service market through technology.
You mentioned youth; what is needed to turn our vast young population into an economic strength?
Zahid Hussain: Long-term thinking is needed here. The advantages of our demographic dividend largely remain a potential. It's somewhat akin to having crops in the field; unless they are shifted to storage, merely having them in the field is not beneficial. Preparation should not start when a young person is searching for a job; rather, nutrition and care during the first thousand days of a child's life are crucial. Prolonged malnutrition during this period can cause long-term harm to a child's cognitive ability and learning capacity. Therefore, prenatal care, safe delivery, postnatal care, and early childhood developmental services must reach families. The disadvantage that starts with nutritional and care disparities in childhood impacts education and career later.
Another significant area is education. We have achieved increased enrollment and reduced gender gaps in school participation. However, this numerical progress has not equally reflected in the quality of education. Recent surveys reveal alarming gaps in learning, emphasising the need to focus on reading, comprehension, arithmetic, life skills, and fundamental scientific concepts. Subsequently, the relevance of technical and vocational education arises. The training we provide should align with workplace demands. Without a robust foundation in health and education, we cannot fully capitalise on the benefits of our large young demographic.
The economy of Bangladesh easily feels pressure from wars, market instability, or natural disasters. How can the country be better prepared to handle future crises?
Zahid Hussain: Preparation must acknowledge that global uncertainties and crises will happen. After 2020, we have seen major shocks like the coronavirus pandemic, the Russia-Ukraine war, and now the conflict around Iran. Despite sharing the same world, some countries have managed to withstand these shocks and maintain growth. Hence, it is insufficient to solely attribute our situation to external crises. The key issue is resilience. For this, robust institutions are needed in the financial sector and government revenue management. Monetary policy, exchange rates, supervision of banks and financial institutions, and management of government income and expenditure are the primary tools to handle crises. Skilled labour and strong private institutions are also necessary. Responses should ensure that damage does not fall solely on one group; equitable burden-sharing is part of resilience.
Understanding the changes in Bangladesh's developmental landscape is crucial. Despite limited income and various adversities, Bangladesh once achieved more than expected in extending life expectancy and reducing child mortality and poverty—a phenomenon termed the ''Bangladesh Paradox. ’ Now the opposite question arises: Why aren't we advancing as much as expected based on past achievements? We are transitioning from exceeding expectations to a development deficit, which I term the ''Bangladesh Puzzle". At the core of this explanation lies a lack of good governance.
Good governance is not merely about having laws or institutions. Using a cricket analogy makes it simple: If influential players' offenses are overlooked while ordinary players are punished, the game isn't fair. Similarly, in economics, how rules are made and applied to whom is significant. Crisis preparation isn't just about saving money; it involves ensuring fair rule application and institutional effectiveness. Without strengthening these, each new shock will bring previous weaknesses to the forefront.
Often, economic planning continuity changes with government turnover. What economic issues must political parties agree upon for the country's long-term interests, and how can such consensus be built?
Zahid Hussain: We need to examine how much actual difference exists between political parties regarding economic goals. Looking at election manifestos, there isn't a huge difference in fundamental issues. There is no major disagreement on goals such as poverty reduction, employment increase, and export diversification. Likewise, there is broad consensus on the need to fix the banking sector, ensure reliable energy supply, reform regulations, and improve infrastructure and ports.
There's also little basic objection to the government strategy mentioning restoration, recovery, and enhancing crisis resilience. Therefore, if we identify the primary problem merely as a lack of consensus on economic goals, we miss the real issue.
Before coming to power, political parties promise to curb corruption and reform institutions, but their actions often do not align with such promises once in power. Why isn’t what is good for the economy reflected in political behaviour? Understanding this gap is crucial. Politics and economics influence each other. However, when considering where significant change will originate, political reform comes to the forefront. Without change in political culture, establishing good governance is difficult, and without good governance, economic progress won't be sustainable.
Thank you for giving this interview.
Zahid Hussain: Thank you as well.
#This interview, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam.