World Bank says an estimated 2 million people slipped into poverty this year
Nearly two million people are estimated to have fallen into poverty in 2025 as Bangladesh grapples with an economic downturn almost comparable to the Covid-19 pandemic period, according to a new World Bank report published yesterday.
Macroeconomic conditions have deteriorated significantly since 2023, with GDP growth slowing from 6 percent to an estimated 4 percent this year.
Consequently, the national poverty rate is projected to rise to 21.2 percent in 2025 from 20.5 percent a year earlier. This follows a slide of more than three million people into poverty in 2024, signalling that the economy is losing its ability to shield vulnerable populations from shocks.
The report, "Bangladesh Poverty and Equity Assessment", lays bare the country's broader economic vulnerabilities. It also warns of widening inequality, whether measured by the Gini coefficient or the prosperity gap.
"Poverty and inequality are both projected to worsen in the wake of recent income losses," the World Bank said.
The trend reflects a shift that began several years ago, as Bangladesh's growth became less inclusive and its ability to convert expansion into poverty reduction weakened.
Between 2010 and 2022, Bangladesh's economic growth proved far less effective at alleviating poverty than that of its neighbours. The country's poverty-reduction elasticity, which measures the decline in poverty for every percentage point of economic growth, stood at just 0.9, lagging significantly behind the South Asian average of 1.5.
High vulnerability to shocks has fuelled rising poverty amid elevated inflation and job losses from 2022 to 2025. The report notes that 62 million people remain just above the poverty line with "unstable consumption, limited savings, and inadequate social protection." These households, it says, were disproportionately exposed to the combined pressures of inflation, shrinking real incomes, and a weakening labour market.
Labour incomes also softened as job creation slowed and real earnings for less-skilled workers stagnated. Employment fell by nearly two million between 2023 and 2024, with a further loss of 800,000 jobs expected in 2025. Women and young people were the hardest hit.
"A business-as-usual approach will not accelerate poverty reduction. The fastest path to reducing poverty and ensuring dignity is through job creation, particularly for youth, women, and vulnerable populations," said Jean Pesme, World Bank Division director for Bangladesh and Bhutan.
The downturn compounds a structural shift already underway since 2016. While rural areas drove poverty reduction between 2016 and 2022, aided by expanding agricultural employment, urban poverty declined more slowly, and job quality deteriorated. Rural poverty fell by 8.5 percentage points during the period, compared with 4.6 points in urban areas, narrowing the rural-urban gap significantly.
But the transformation was not wholly positive: job creation increasingly moved into lower-productivity sectors, and the contribution of labour income to poverty reduction plunged from 89 percent in 2010–2016 to 51 percent in 2016–2022.
LABOUR MARKET
Despite withdrawing from the labour market, more young women are pursuing education. Between 2016 and 2022, the share of females aged 15 to 29 engaged in education rose from 27.3 percent to 31.6 percent. Yet enrolment among young poor females grew more slowly than the national average, widening the education gender gap from 10.6 percent in 2016 to 14.4 percent in 2022 for females aged 15 to 24.
Investing in education has not necessarily translated into urban job opportunities. Low national urban unemployment rates mask the deep struggles young, educated cohorts face in securing work, according to the report.
"We have a paradox that education is not being translated into human capital," said Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre, speaking as chief guest at the launch. "Unless we solve this core paradox, any '10,000 jobs programme' will merely reinforce inefficiency. We must assess why education is not being converted into productivity."
Even as the national unemployment rate declined between 2016 and 2022, nearly one-fifth of young women remained unemployed, while unemployment among young men rose by 2.5 percentage points.
"This is partly explained by the mismatch between the skills provided by the education system and the needs of the job market," the World Bank said.
"If we truly want to raise productivity and create jobs, our domestic market will not suffice. Bangladesh must pursue deeper regional cooperation — in trade, investment, and connectivity," said Prof Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue.
Weakening job prospects have also pushed many discouraged workers — especially women — out of the labour force altogether. Labour force participation fell from 60.9 percent to 58.9 percent between 2023 and 2024, adding three million working-age people to the ranks of the inactive — 2.4 million of them women.
This decline follows patterns highlighted earlier in the report: while rural labour force participation rose from 59.1 percent to 65.4 percent between 2010 and 2022, urban participation fell from 56.4 percent to 51.1 percent, despite stronger employer demand and higher wages in cities.
"In rural areas, a significant proportion of women often work as unpaid family labourers or in very specific kinds of informal jobs," said Prof Sayema Haque Bidisha, pro-vice chancellor of Dhaka University. "The quality of jobs is more important than employment elasticity."
AK Enamul Haque, director general of the Bangladesh Institute of Development Studies, stressed the need for an investment-friendly environment, noting that job creation is closely tied to the health of the banking sector. "The state of the banking sector is crucial for promoting economic growth. Public investment is also essential to reduce poverty, particularly by linking rural areas with urban centres," he said.
