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Economic growth driving poverty reduction but at slower rate in Bangladesh

The report, Bangladesh Poverty Assessment, launched today, shows that robust economic growth continued driving poverty reduction but at a slower rate.

World Bank | Dhaka | Updated: 07-10-2019 17:52 IST | Created: 07-10-2019 17:52 IST
Economic growth driving poverty reduction but at slower rate in Bangladesh
“The progress that Bangladesh has made in reducing poverty in the last decade is remarkable,” said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan. Image Credit: Twitter(@UNHCR_BGD)

Bangladesh has progressed significantly in reducing poverty and improving living conditions, mostly driven by labor income. Between 2010-2016, about 8 million Bangladeshi exited poverty.

The report, Bangladesh Poverty Assessment, launched today, shows that robust economic growth continued driving poverty reduction but at a slower rate. Since 2010, while the pace of economic growth increased, the rate of poverty reduction declined.

Also, poverty reduced unevenly across the country. Since 2010, the historical gap in poverty between eastern and western divisions re-emerged: in the west, poverty increased in the Rangpur division, stagnated in Rajshahi and Khulna, while in the east, poverty declined moderately in Chittagong, and rapidly in Barisal, Dhaka, and Sylhet.

"The progress that Bangladesh has made in reducing poverty in the last decade is remarkable," said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan. 'But, with one out of four people still living in poverty, the country needs to do more, especially in addressing the new frontiers of poverty. For example, tackling urban poverty is critical since at current trends more than half of the poor in Bangladesh are projected to live in the urban areas by 2030."

During the same period, rural areas accounted for about 90 percent of the poverty reduction in the country. There was little poverty reduction in urban areas and the share of urban people living in extreme poverty remained the same. This has slowed the national progress in poverty reduction.

Industry and services, not agriculture, mostly led to poverty reduction in rural areas. Agriculture growth was slower and less poverty-reducing than before. In urban areas, manufacturing, in particular, the garments sector, led the poverty reduction. However, slowing down job creation in manufacturing limited the share of families who could benefit. Also, poverty rates among self-employed in the service sector increased, creating a setback on urban poverty reduction.

"The report highlights that traditional drivers of poverty played a role, but also notes the limits of some of these drivers in bringing about progress", said Maria Eugenia Genoni, World Bank Senior Economist and report co-author. "Further, to achieve its vision of upper-middle-income country by next decade, Bangladesh can build on its own experience of innovative policy experimentation to tackle poverty in a more sophisticated and urbanized economy."

Since the country is facing new and re-emerging frontiers of poverty reduction—urban poverty and a re-emerging east-west divide—the report advocates that by adopting traditional and fresh solutions, Bangladesh can reduce poverty faster.

AHM Mustafa Kamal, Minister of Finance, was the chief guest at the event, where the policymakers, civil society, private sector, and media representatives joined.


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