Until a week ago, Bangladesh, a nation of 171 million was under the firm grip of Prime Minister Sheikh Hasina and her Awami League. Her increasingly autocratic governance stifled discussion of change even as cracks in the country’s economic model began to spread.
But following a short student-led uprising, Bangladesh now has an interim government headed by Nobel Peace Prize-winning economist Muhammad Yunus and a diverse, nonpartisan team of activists, academics, and retired officials, including former central bank chief Salehuddin Ahmed.
As a result, even Alam, head of the country’s main business lobby group, is embracing the idea of radical change. “It’s a new Bangladesh,” Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry, told Nikkei Asia.
“The spirit of the youth who fought to bring change and the experience and connections of the Nobel laureate with the global community will help achieve an economic revolution.”
English translation of my mother’s statement:
Dear Bangladesh,
As-salamu alaykum.
Brothers and sisters, on August 15, 1975, the Father of the Nation and the then President of Bangladesh, Bangabandhu Sheikh Mujibur Rahman, was brutally assassinated. I pay my deepest respects to…
— Sajeeb Wazed (@sajeebwazed) August 13, 2024
Alam, who owns companies exporting steel and shrimp and another importing pharmaceutical ingredients and packaging, is keenly aware of how dependent Bangladesh is on international trade and of the impact of the bloodshed Hasina unleashed as she fought to squash the student movement.
“Our image abroad has experienced a big blow,” Alam said. “Since Dr. Yunus is a globally acclaimed person, we need to utilize his image to regain confidence among the international community.”
India-Bangladesh Trade Faces Uncertainty Amidst Political Crisis
All told, at least 400 students and other demonstrators were killed over the course of nearly three weeks of clashes with security forces and Awami League toughs. To try to contain the protests, initially sparked by the restoration of quotas reserving most civil service positions for the children of veterans of the country’s 1971 war of independence and other favored groups, Hasina’s government imposed a curfew and cut off internet services for 10 days.
The unrest also affected air and sea traffic in and out of Bangladesh. The Foreign Investors’ Chamber of Commerce & Industry has assessed the economic impact of the turmoil at over $10 billion.
The timing of the blow is awkward for Bangladesh. The country is less than halfway into a three-and-a-half-year, $4.7 billion financial aid program that the International Monetary Fund launched to alleviate the squeeze on Bangladesh’s finances from the impact of the Ukraine war and the COVID pandemic.
Despite the cash infusion, Bangladesh’s foreign reserves continue to decline. As of the end of June, its remaining holdings were enough to cover only 3.3 months of imports, according to rating agency S&P Global, which downgraded Bangladesh two weeks ago.
S&P forecast that further net outflows will shrink the country’s import cover to 2.6 months over the next two years. Within the same time frame, Bangladesh is also set to lose the trade preferences that undergird its exports of clothing to Europe, the country’s main source of foreign exchange.
Yet sensing Hasina’s exit as a moment of opportunity, many are optimistic about where Bangladesh is headed. The DSEX Index, Bangladesh’s stock market benchmark, rose 15% last week over the four trading sessions following the prime minister’s departure for India.
- Original Story Lead: Nikkei Asia
