New Report: Bangladesh’s Poverty Falls Sharply but Inequality and Risks Rise

Between 2010 and 2022, Bangladesh lifted 34 million people out of poverty, one of the most significant poverty reductions in the world.

 

Bangladesh has made remarkable progress in reducing poverty over the last decade, but the pace of improvement has slowed and economic gains have become less inclusive, according to the newly released Bangladesh Poverty and Equity Assessment 2025. The report highlights striking achievements between 2010 and 2022, but also significant challenges that threaten future progress unless decisive policy action is taken.

Major Gains in Poverty Reduction, But Momentum Has Slowed

Between 2010 and 2022, Bangladesh lifted 34 million people out of poverty, one of the most significant poverty reductions in the world. Extreme poverty fell from 12.2% to 5.6%, while moderate poverty dropped from 37.1% to 18.7%—transformative changes that improved lives nationwide.

Access to electricity, education, sanitation, and basic services expanded dramatically, contributing to better living standards across both urban and rural areas.

However, despite the progress, the report warns that nearly 62 million Bangladeshis—about one-third of the population—remain vulnerable to falling back into poverty if faced with illness, job loss, natural disasters, or economic shocks.

Rising Inequality and Less Inclusive Growth Since 2016

The World Bank notes a distinct shift in Bangladesh’s growth pattern after 2016. While GDP continued to rise, growth became less inclusive, benefiting wealthier households disproportionately.

• Income inequality increased.

• Labor income weakened.

• Job creation did not keep pace with population growth.

• Rural poverty reduction outpaced urban poverty reduction.

By 2022, one in four poor Bangladeshis lived in a city, reflecting rising urban hardship and the growing vulnerability of urban informal workers.

World Bank Division Director Jean Pesme said the country is at a turning point.

“A business-as-usual approach will not accelerate poverty reduction,” he said. “The fastest path forward is through job creation—particularly for youth, women, and vulnerable populations. A pro-poor, climate-resilient, and job-centric strategy is essential.”

Job Market Struggles: Youth and Women Hit the Hardest

The report highlights widespread employment challenges:

• Manufacturing job creation stagnated, reducing opportunities in traditionally strong sectors such as garments.

• Many jobs shifted to less productive sectors, weakening overall income growth.

• One in five young women is unemployed.

• One in four educated young women cannot find a job.

• Women’s labor-force participation in urban areas has fallen.

• Half of youth (15–29 years) work in low-paying jobs, revealing a significant skills mismatch.

Outside Dhaka, urban job creation has stalled, and opportunities for young people—especially women—remain limited.

Migration as a Pathway Out of Poverty—With Barriers

Migration continues to be a lifeline for millions:

• International remittances have helped many families escape poverty.

• Domestic migration from rural to urban areas provides opportunities but often leads to migrants living in overcrowded, unsafe settlements with poor access to services.

The report warns of growing inequality in access to international migration. Only better-off households can afford the high upfront costs required to send workers abroad, limiting opportunities for poorer families.

Social Assistance Still Missing the Poorest

While Bangladesh has expanded social protection programs, significant challenges remain:

• 35% of the richest families received social protection benefits in 2022.

• Half of the poorest families were excluded despite needing help the most.

• Subsidies for electricity, fuel, and fertilizer largely benefit wealthier households, reducing their effectiveness as pro-poor tools.

Strengthening targeting and improving delivery systems are essential to reach vulnerable populations more effectively.

Climate Change Deepening Regional Inequalities

Bangladesh’s long-standing East–West regional divide has narrowed, but climate vulnerabilities—such as cyclones, flooding, salinity intrusion, and rising temperatures—are creating new spatial inequalities.

Urban areas are grappling with congestion, pollution, inadequate housing, and overstretched services, while many rural areas face declining agricultural productivity and climate-driven displacement.

Report co-author and Senior Economist Sergio Olivieri said improving connectivity, creating urban jobs, and strengthening rural value chains will be critical to boosting shared prosperity.

Four Policy Priorities to Restore Progress

The World Bank identifies four core policy areas that could help Bangladesh sustain and accelerate poverty reduction:

1. Strengthen the Foundations for Productive Jobs

• Improve human capital through better education and skills training.

• Expand digital infrastructure and foundational learning.

• Increase female participation in the labor force.

2. Create More and Better Jobs for the Poor

• Revitalize manufacturing and diversify exports.

• Promote entrepreneurship and SME growth.

• Improve job opportunities outside Dhaka.

3. Enable Markets to Work for the Poor

• Invest in modern agricultural processing.

• Reduce market barriers and improve business regulations.

• Develop climate-smart, pro-poor value chains.

4. Strengthen Resilience Through Better Fiscal and Social Policies

• Improve social protection targeting and efficiency.

• Reform subsidy systems to benefit lower-income households.

• Expand adaptive safety nets for climate and economic shocks.

A Critical Moment for Bangladesh’s Future

Bangladesh has achieved impressive progress over the past decade. Yet with rising inequality, climate risks, and slowing job creation, the country now faces a crucial crossroads.

With bold policy choices—especially those that expand jobs, empower women and youth, strengthen resilience, and ensure markets work for everyone—Bangladesh can regain momentum, reduce vulnerability, and continue its journey toward shared prosperity.