Bangladesh Offers Hope for Economic Reform Amid Past Mismanagement, Says Expert

Upheaval in Bangladesh is considered “a hugely positive occasion,” according to Lutfey Siddiqi, an adjunct professor at the National University of Singapore. He explains that after years of “economic mismanagement” by the previous leadership, the new leadership could serve as a catalyst for structural reforms and improvements in economic conditions. He was talking to CNBC International News prior to his appointment as the Special Envoy for International Affairs to the Chief Adviser of Bangladesh this week

Bangladesh, despite having strong fundamentals such as a large, young, digitally connected, and enterprising population with decent physical infrastructure, faced severe economic mismanagement, especially in the last two years leading up to the January elections. During this time, the stock market dropped by 15% when global markets were up, and the exchange rate fell by a third without a corresponding increase in exports. These issues culminated in a state of economic instability, creating a scenario where financial systems were held at inconsistent levels, and once the controls were lifted, confidence in the system was already eroded.

Now, the regime change is seen as an opportunity to reset the country’s trajectory. Siddiqi draws parallels between Bangladesh, India, and Sri Lanka, suggesting that the country’s demographic dividend offers potential for economic advancement, similar to what is seen in other Asian economies like Malaysia and Vietnam. However, he emphasizes that governance is key to achieving this progress.

He highlights the appointment of Professor Muhammad Yunus as a significant moment for the country, likening Yunus’s potential impact to the transformative leadership of Mario Draghi. Yunus’s personal integrity, both domestically and internationally, and his ability to bring together international capital and assemble a diverse, capable team are viewed as crucial in unlocking and unfreezing the economy. Yunus is expected to implement structural reforms and encourage a positive economic cycle that could crowd in private investment and diaspora involvement, potentially leading to a virtuous cycle of economic growth and stability.