Beware of mind bubbles

In its January 2025 edition of the Integrated Review of Bangladesh's Development, the Centre for Policy Dialogue recently articulated its concerns regarding the current state of the economy. While acknowledging positive shifts in exports and remittances, the report expressed apprehensions over persistent inflation, declining real wages, continued low quality of employment, rising youth unemployment, revenue shortfalls, and other pressing economic challenges.

Don't shoot the messenger

The new establishment did not receive this critique kindly. Their reaction was tinged apparently with annoyance and dismissal. While the reaction highlighted the export rebound, as acknowledged in the CPD report, their argument lacked substantial evidence, relying instead on optimistic projections of an investment resurgence by the time they exit in 2026. These are ominous signs of getting snared in bubbles.

While hopes are certainly important, they do not address the core issues at hand. The interim government has taken commendable steps to retain confidence in the banking system, facilitate international trade and attract foreign direct investment. It has commissioned efforts to delineate macroeconomic and structural reform ambitions, goals, strategies and priorities.

No doubt the economic challenges, amongst others, have been inherited, burdens that unfortunately are irrevocable. Perhaps the new establishment feels responsible for not being able to effect changes in these states of the economy. Humility demands they should while cognisant of the difference between efforts and outcomes. The CPD, and for that matter others as well, are simply narrating the outcomes. They may have gone overboard fretting about the lack of effort underappreciating the multifarious stresses, including at times existential threats, the interim government had to face day in day out since 5 August 2024.

But that's not the point. The point is that the government must be genuinely empathetic, humble and grounded in tangible change. Lofty reform promises or blaming the past 15 years of institutional decay does nothing to mitigate inflation or boost quality employment. People may be impatient for some quick fixes, but they also desire a principled, fact-checked approach acknowledging the hardships of the masses.

The veracity and candour with which we can gauge and express what is happening in the economy these days is a credit to the interim government as they enabled fearless disclosure of macroeconomic statistics. Reacting adversely to calling a spade a spade risks losing trust in official data if and when the data start showing improvements. We may be sleep shooting the messenger! Improvements could be interpreted as data "corrections" intended to avert criticisms.

Communicate reality

While the government's efforts may have fallen short when measured against, perhaps exuberant, expectations, it is imperative to communicate the complex interplay of factors contributing to these deficiencies.

The challenges facing the interim government are not superficial but deeply embedded in the socioeconomic fabric. The inherited pains span multiple domains – from inflation to underemployment, under investments, revenue shortfalls, skill deficits, and health deprivations, to name just a few. Understanding why these shortcomings exist is a multifaceted endeavour.

The economic woes are a consequence of historical mismanagement, global economic pressures, disruption from recent political transitions, and, surely, missing out on bending the rod when it is hot. High inflation has been exacerbated by supply chain extortions, exchange rate depreciation and price gouging in case of some commonly consumed food items. The dip in investment is partly due to a lack of confidence among both domestic and international investors, who remain wary of the stability and predictability of the economic environment.

Closure of industrial units orphaned by the change in regime has aggravated industrial unrest. The "orphan" industry argument to protect jobs by supporting wages in these units is counterbalanced by denting the "culture of impunity" argument to not reward financial and intellectual corruption by their owners under the previous regime. A damn you do, damn you don't situation.

The administration inherited from the previous regime has demonstrated significant bureaucratic inertia, impeding swift policy implementation. Red tape is as alive and well as it ever was. Moving needles feel like moving mountains. The transition period has also seen a vacuum in leadership in several key public institutions, filled by new actors some of whom may lack the courage, agility and drive required to navigate such turbulent times.

The political landscape itself has been a barrier to progress. Frequent street agitations and an oscillating political dynamic have nurtured an atmosphere of uncertainty, instability, and impunity further deterring economic recovery efforts. The unencumbered presence of entrenched interests from the past regime and corruption has added salt to pre-existing injuries. The political figures currently in circulation have reverted to old behaviours and tactics.

Bubbly minds do not help

Those in executive power bear the ultimate responsibility for service delivery. Citizens deserve answers on the efforts being made and those that urgently need attention. Denialism only leads to a self-congratulatory illusion of reality. It is essential to lay bare the facts and have the courage to recognise the systemic barriers that can only be changed incrementally during the transition to a new political settlement. Transparency about what can and cannot be achieved during their remaining tenure, however variable that may still be, is crucial.

Formulating a coherent strategy to reboot an enabling environment for sustainable economic recovery demands a collective effort from all stakeholders, including political parties, civil society, and international partners. There is a potential path forward focusing on achievable changes for the new government in 2026 to build on to alleviate the entrenched economic challenges facing Bangladesh.

Managing expectations is crucial. It requires a candid acknowledgment of the stark realities at hand. Mere assertions that circumstances could have been worse are futile. When one is in a deep hole, the depth is somewhat academic. The focus must be on finding a way out, a task rendered impossible if those in power are swayed by unfounded optimism, if not delusions.