About 21 lakh people slipped into poverty in Bangladesh during the last fiscal year as high inflation, weak income growth, job losses and slower economic expansion eroded living standards, the World Bank said on Tuesday.
Over the previous three fiscal years, an estimated 59 lakh people fell into poverty.
In FY26 alone, the share of Bangladeshis living below the World Bank’s $3-a-day international poverty line rose by 1.1 percentage points to 10.1 per cent.
National poverty also increased for a fourth consecutive year, rising to 22.5 per cent from 18.7 per cent in 2022.
The reversal follows more than a decade of poverty reduction. Between 2010 and 2022, Bangladesh lifted about 90 lakh people out of extreme poverty and 2.5 crore out of moderate poverty, according to the World Bank’s Poverty and Equity Assessment.
But by 2022, around 6.2 crore Bangladeshis still lived just above the poverty line, with unstable consumption, limited savings and weak social protection.
That vulnerability deepened after 2022 as inflation rose, labour incomes weakened and employment fell.
Nearly 20 lakh jobs were lost between 2023 and 2024, with a further decline of about 8 lakh expected in 2025.
Factories also closed, cut operating hours or shed workers as weak demand, energy shortages and subdued investment hit industry, with spillovers into services and agriculture.
Women were particularly affected. Female labour-force participation fell to 38.4 per cent in 2024 from 42.8 per cent in 2022 as many women who lost jobs in industry and services left the labour market.
The latest Bangladesh Development Update, released on Tuesday, also shows that the growth slowdown has continued and worsened.
The global lender cut its estimate of Bangladesh’s FY26 growth to 3.4 per cent from 3.9 per cent projected in April. It expects growth to remain at 3.4 per cent in FY27 before recovering modestly to 3.9 per cent in FY28.
In April, the lender had cut its FY26 forecast to 3.9 per cent from 4.6 per cent.
The World Bank said the slowdown increasingly reflected structural weaknesses rather than a temporary loss of momentum.
Private investment contracted in FY26, while private-sector credit growth fell to 4.5 per cent in June, its lowest level in 33 years.
Weak business confidence, banking-sector vulnerabilities and gas and electricity disruptions weighed on investment, while government investment fell to a historic low amid fiscal and implementation constraints.
Manufacturing and construction remained subdued as energy shortages, weak investment and softer external demand constrained production.
Financial-sector weakness, poor revenue mobilisation, energy bottlenecks and declining public investment were eroding Bangladesh’s resilience and longer-term growth potential, the World Bank said.
Non-performing loans rose to 33.2 per cent of total loans in June 2026, while the banking system’s capital adequacy ratio fell to negative 2.6 per cent in December 2025, against a regulatory minimum of 10 per cent.
Inflation eased but continued to squeeze household purchasing power.
Average headline inflation fell to 8.7 per cent in FY26 from 10 per cent in FY25 and eased to 8.3 per cent in August, mainly because of lower food inflation.
Real wages for low-paid workers remained under pressure, making it harder for vulnerable households to absorb further shocks.
The external sector was more resilient, helped by record remittances.
Government finances, however, came under greater strain.
Domestic revenue rose only modestly to an estimated 8.3 per cent of GDP from 8 per cent in FY25, constrained by weak tax policy, low compliance and administrative shortcomings.
Spending increased because of higher subsidies, interest payments, social expenditure and bank recapitalisation costs, while development spending contracted sharply amid slow project implementation and reviews of large infrastructure projects.
Interest payments reached about 2.6 per cent of GDP.
Structural reform remained slow. The planned separation of tax policymaking from tax administration has yet to become operational, while renewable energy remains severely underdeveloped because of an inadequate policy environment.
The lender identified three priorities for restoring stronger growth: stabilising the financial sector, strengthening energy security and governance, and raising domestic revenue to create room for productive investment.
For banks, it called for completing asset-quality reviews, enforcing time-bound restructuring, ending regulatory forbearance and strengthening the resolution of non-performing loans.
In energy, it urged greater domestic gas production, better liquefied natural gas infrastructure, diversified fuel sources and more investment in transmission and distribution.
It said renewable energy, storage and energy efficiency could reduce dependence on imported fuels over the medium term.
