Sheikh Hasina’s Costly Missteps and Bangladesh’s Depreciating Economy

By: Muskan Agrawal

Bangladesh, once hailed as a rising star in South Asia, is witnessing an economic downturn that threatens to erase the gains post-formation. Under Prime Minister Sheikh Hasina's prolonged and increasingly authoritarian rule, Bangladesh experienced a worrying slide in key economic indicators, signaling deep-seated structural issues demanding urgent attention.

The real GDP growth rate, non-tax revenue, and Bangladesh's standing compared to neighboring countries paint a grim picture of an economy struggling under the weight of mismanagement and autocracy. In the FY 2023, Bangladesh's real GDP growth stood at 5.8%, a sharp decline from 7.1% in FY 2022. The drop of over 1.3 percentage points in just one year is more than a statistical blip; it reflects the underlying vulnerabilities in the economy. Real GDP growth is a critical measure of economic health, representing the value of all goods and services produced, adjusted for inflation.  

The decline in growth suggests that Bangladesh is losing its competitive edge, particularly in its key export sectors like textiles. Under PM Hasina’s increasingly centralized governance, the economy has suffered from stifled innovation, reduced foreign investment, and a lack of diversification. These issues have been compounded by global economic challenges, but the root of the problem lies in domestic policies that have prioritized political control over economic reform. 

One of the most glaring indicators of Bangladesh's economic troubles is the decline in non-tax revenue as a percentage of GDP. The 50% decrease in non-tax revenue over a decade is alarming, particularly because non-tax revenue, which includes income from state-owned enterprises, fees, and dividends, is a crucial component of a government's fiscal capacity.  

A healthy non-tax revenue stream allows the government to invest in public services and infrastructure without overly relying on tax hikes or foreign debt. The steep decline in this revenue highlights the inefficiencies and corruption within state-owned enterprises, as well as the government's failure to capitalize on other potential revenue streams. Under PM Hasina’s administration, the focus on short-term political gains often came at the expense of long-term economic strategy.

When comparing Bangladesh's non-tax revenue in 2023 with that of its Asian neighbors, the country’s precarious position becomes even clearer. Bangladesh’s non-tax revenue as a percentage of GDP stands at a mere 1%, significantly lower than Nepal, Cambodia, India, and Vietnam.  

Vietnam, for example, successfully leveraged its state-owned enterprises and diversified its economy, leading to a non-tax revenue rate four times that of Bangladesh. This disparity underscores the missed opportunities under PM Hasina’s rule, where economic policies have often been reactive rather than proactive, and governance has been more about consolidating power than fostering sustainable growth. 

The economic indicators reveal a country at a crossroads. Under PM Hasina’s increasingly tyrannical leadership, Bangladesh’s economy not only lost momentum but is also now at a risk of long-term stagnation. To reverse this decline, Bangladesh needs comprehensive reforms that go beyond mere GDP growth. This includes improving governance, enhancing the efficiency of state-owned enterprises, and diversifying revenue sources.