DHAKA, Bangladesh, Mar 11 (IPS) – The recent student movement in Bangladesh demanding reform of the quota system for public jobs led a ‘march of the people’ towards the official Residence of the Prime Minister Sheikh Hasina on 5th of August 2024. The security forces of the country, including the army, refused to open fire on the marching crowd. Fearing an imminent attack on her residence without the protection of the army, Sheikh Hasina fled to neighbouring India after being in power continuously since 2008. With Sheikh Hasina fleeing to India on 5th of August 2024 her authoritarian and corrupt rule of 15 years just melted away.
Prior to this sudden and dramatic turn of events, during her rule, the country was mired by institutional and financial corruption and crony capitalism. The interim government that took over under the leadership of Nobel Laureate Prof. Yunus found a country politically broken to the core, financially drained without foreign currency reserve, so much so that openings letters of credit (LC) for imports were restricted. Bangladesh Taka which was trading at 104 in May 2023 to the US Dollar started trading at Taka 120 by the end of 2024.
Delving deep into the distressed financial sector, the White Paper on “the state of Bangladesh Economy” prepared by a Committee of Experts appointed by the Interim Government, revealed that: between 2009 and 2023, illicit financial outflows averaged $16 billion annually– more than double the combined value of net foreign aid and FDI inflows. Politically influenced lending practices left the banking sector with empty coffers. Recognised non-performing loans (NPLs) alone increased nearly ten times since 2010, reaching an equivalent of 7 percent of GDP at end-June 2024.
Widespread concerns were raised about what will happen to the country in the face of such a deep financial meltdown. Will all its economic achievements of the last decade, including reduction of poverty, enhanced food security and reduced dependency on foreign aid, as well as nascent growth of industries, particularly the garment sector, melt away with the political and financial meltdown of the country ?
The political situation remains very uncertain in spite of all the good will and good leadership of Nobel Laureate Prof. Yunus. What may happen politically is very difficult to assess as Bangladesh is now engulfed in the global geo-political quagmire. Internal forces are no longer completely independent to decide the future course of the country without external influence and pressure.
Fortunately, however, the economic situation, particularly the real sectors of the economy remains resilient, strong and thriving and providing relative calm and stability in the rural areas of what is predominantly a rural economy.
Why are the real sectors of the economy are resilient and thriving ?
Unsurprisingly it emerges that the stability and resilience of the economy to withstand socio-political and financial crisis is primarily due to the country’s success in: modernizing and developing its agriculture sector.
It is well established in the literature that every country that has made the transition to development, reduced poverty and increased food security, has done so through high agricultural growth. Empirical evidence shows that higher levels of economic development are positively correlated with agricultural development, particularly with improved efficiency of the sector in terms of land and labour productivity, aggregate value added and capital/labour ratio.
The recent evidence from Bangladesh now also demonstrates that a dynamic agriculture sector also assures: stability at the times of political and financial crisis.
Bangladesh agriculture value added grew at more than 3 percent since the early 2000 till 2023, while population growth continued to decline from 1.2 in 2013 to 1.03 in 2023. This growth has been the powerful driver of poverty reduction since 2000. Indeed, agriculture accounted for 90 percent of the reduction in poverty between 2005 and 2010 (World Bank).
Despite frequent natural disasters and population growth food grain production tripled between 1972 and 2014, from 9.8 to 34.4 million tons. As a result, from being completely dependent on foreign food aid it became almost self-sufficient in basic food and net ODA, as a percentage of GNI fell from 8 in 1977 to less than 1 in 2023 (World Bank).
In addition to contributing to food security and poverty reduction sustained agricultural growth also contributed to growth of manufacturing and services, including now the widely acclaimed garment sector. Low wages, primarily due to agriculture contributing to lower cost of living, fuelled its growth. According to the World Data Info: cost of living (inclusive of rent) in Vietnam and China, the competitors of the Bangladesh garment industry, is 53 and 43 percent respectively higher than in Bangladesh.
People feared that the financial and the political crisis will derail agricultural growth and then the rest of the economy along with it. However, overall agricultural growth of the country kept its pace and total food grain production did not decline. In fact milled rice production increased to 36.6 million tons from 36.3 in 2022/23. Likewise, Rice yield in 2024/25 increased to 4.82 t/ha from 4.70 in 2022/23. Overall growth of value added in agriculture remained at more than 3 percent (Bureau of Statistics).
Continued and sustained agricultural growth provided the life line to industries and the garment sector in particular to withstand the financial crisis. During January 2025, ready-made garment exports reached $3.664 billion, a 5.57 per cent rise from $3.471 billion in the same month of the previous year. Knitwear garment exports rose by 6.62 per cent to $1.850 billion, and woven garments increased by 4.52 per cent to $1.814 billion in the same month.
Overall, Bangladesh’s total exports expanded 24.9 % YoY in Nov 2024, compared with an increase of 25.7 % YoY in the previous month. Garment exports surged 12% in first 7 months of FY24–25, (Export Promotion Bureau of Bangladesh).
Agricultural growth, increased export and continued flow of remittances have helped the country to face the financial meltdown and given the interim Government led by Prof. Younus enough breathing space to search and mediate a solution to the political crisis.
Why did Bangladesh agriculture remain so resilient during this political and financial crisis? What can we learn from it?
Bangladesh agriculture development policy framework and plans has benefited from a national consensus and it was backed up by all the previous Governments, since its independence in 1971. This ensured continuity of a sound and consistent policy framework with focus on substantial public investments in technology, rural infrastructure and human capital. As a result, its total factor productivity (TFP), at 1.23, is more than the global average of 1.18.
The country’s agriculture focused on achieving self-sufficiency, and is dominated by the production of rice, largely by smallholder farmers. Production is slowly moving towards greater diversification with high-value crops such as fruits and vegetables, livestock, and fisheries, as demand has increased. However, the overall share of these products remains small, relative to rice. Irrigation has been important for expanded rice production. Education, research, and extension—as well as other facilitators, such as financial investors—are focused on supporting rice production.
The traditional public sector institutions, at national and local level, were primary drivers of setting policy and building the enabling environment, as well as to promote information and communications technology (ICT) with digitalization to overcome traditional constraints (e.g., market and weather information).
All development plans and strategies recognized the importance of modernizing the agriculture sector, developing further resilience to climate hazards, and managing natural resources sustainably. It emphasised that conscious management of key natural resources—land, water, forestry, natural habitats, and air—is crucial for a resilient economy.
However, Bangladesh agriculture sector is now facing a new challenge to diversify its production in keeping with changing demands for diversified food and agri-products, fuelled by increased income of the population. How will it manage to maintain its level of rice production and meet the challenge of diversification, with very limited cultivable land, is yet to be seen.
The author is a former UN official who was Chief of Policy Assistance Branch for Asia and the Pacific of the United Nations Food and Agriculture Organization of the United Nations (FAO).
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© Inter Press Service (2025) — All Rights Reserved. Original source: Inter Press Service