There is much gloom and doom emerging over the moribund state of the economy, and this was even before the World Bank slashed its forecast for Bangladesh's economic growth by 1.7 percentage points to 4 percent for the current fiscal, citing "significant uncertainties following recent political turmoil" and "data unavailability". The revised projections would mark the lowest growth rates since the 2019/20 fiscal, when Bangladesh's economy expanded by only 3.45 percent due to the severe impact of the Coronavirus pandemic.

It is important to remember that the previous government left behind a fragile economy marked by high inflation, declining foreign exchange reserves, sluggish private investment, a growing debt burden, poor revenue collection, inefficiencies in development project implementation, and weak governance in the financial sector. The breakdown of that system on August 5th did not signal an immediate reversal of these assorted ills. In any case, two months is too short a time period for things to start changing in terms of the economy. The challenges regarding reducing poverty and controlling rising inequality, regaining growth momentum, and generating employment still stand today.

In the short term, political uncertainties are expected to keep investment and industrial growth subdued, the WB said about downsizing Bangladesh's growth forecast. It said recent floods are expected to set back agricultural production modestly. At the same time however, during the virtual press conference announcing the revised forecast, Franziska Ohnsorge, World Bank chief economist for South Asia, mentioned the recent floods as one of the reasons for downsizing the growth forecast. In the medium to long term, which is when changes put in place by the government will be seen to take effect, growth is expected to pick up gradually, benefiting from critical reforms in the financial sector, increased domestic resource mobilisation, improved business climate, and increased trade.

That is largely in line with Bangladesh's score in the Purchasing Managers' Index (PMI), which reflects the pace of economic activity, which rose for the second consecutive month in September to stand at 49.7, after dropping below 37 in July. An index above 50 signals economic growth, while below 50 indicates contraction. Bangladesh's PMI is maintained by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, in collaboration with Policy Exchange Bangladesh, who monitor business procurement levels. September's results indicate slight but gradual improvements in the overall economy, despite some disruptions and challenges facing the country. It noted that the manufacturing sector has reverted to expansion, also reflected in positive export growth in September.

Overall, there is a need for patience. There is no doubt that a disorderly transition such as the one that the country underwent on August 5 set the stage for quite a bit of disruption, of the kind that would inevitably affect the economy. But there are signs of hope that the country will certainly get through this. The dollar market has stabilised notably. Inflation has declined for two consecutive months, even though some shocking pricing practices persist among certain retailers for certain items. These will have to be dealt with. Despite news of new extortion rackets replacing old ones, the overall level has definitely gone down. Rebuilding an economy where the benefits accrue to the many, not the few, will take time - but it will be worth it.